The real estate market always seems to regulate itself against swinging one way or the other.
A slew of new listings helped to bring home prices down in July. Active listings broke 2,300 for the first time since November at 2,335. The number of new listings topped out at 936- we haven’t seen this many homes hit the market in over two years. Last July, new listings were an astounding 47% lower than this year, at 638.
In conjunction, sales are down to just 240 closings in July. This represents a 37% decline over last year’s 382. With inventory way up and sales way down, there is a natural pull away from the seller’s market.
To get to the meat of the issue: how did all this affect home sale prices? After nearly breaking sales records the month before, Staten Island’s average home sale price fell about $17k down to $592,203.
We witnessed something similar back in May of 2019 when the rise and fall was even more significant. This record-setting month saw the average home sale price rise to $621,047 only to watch it fall back down to $582,507 the following month. Statistical outliers such as this can’t be taken at face value. We are much better off looking at yearly averages.
A Two Year Break Down
The average sale price from the last 12 months comes out to $598,887. The previous 12 months from summer 2018 to summer 2019 was $582,828. This represents a 2.75% yearly price increase. While $18k is not small, this is still a fairly small percentage increase. On a national scale, the National Association of Realtors® reports yearly price increases were 3.5%. So by comparison, Staten Island has experienced a smaller price increase on real estate.
List to sell ratio is important too. This tells us how close the sale price comes to the home’s list price. At 96.2%, July’s SP/LP ratio was in line with a series within the 96 range lasting a full two years. Thus, average sale prices and SP/LP ratios have held fairly consistent for two years. This indicates a fairly stable market; favoring neither the buyer nor seller.
Low Mortgage Rates Become More Extreme By The Day
For months now, interest rates have been falling drastically to stimulate the home buying economy. The average 30-year fixed rate is now just 2.88%. Some sources have reported even lower numbers. One year ago, it was over 4%. The previous winter, it peaked over 5%.
There is a large possibility that the real estate market is being propped up by these historic lows. Buyers have greater incentive to pull the trigger when the deals are this good. Considering sales are this low, it could be a cause for concern that such low interest rates are keeping the market afloat. It begs the question as to what would happen should they rise.