In contrast, average Q1 sale prices broke records across the board with single-family home sales averaging $4.96 million, condos/townhomes sales averaging $2.5 million, and vacant residential land sales averaging $2.63 million.
So, what’s going on? Once again “SUPPLY & DEMAND” are driving our market. Unlike during the building boom of the mid-2000s, we are seeing the deficit of homes, condos and vacant land for sale playing a big role in the current price spikes. For example, home inventory is the second lowest in 40 years, with condo and vacant land inventory at their third lowest in over 40 years.
Will the “DEMAND” continue?
Increasing prices and the ability to qualify for a loan will play a big part. Since COVID appeared on the scene, average sale prices jumped, and inventory dropped exponentially. The increase in prices affected the locals’ ability to trade up, as well as the ability to qualify for a higher loan amount. Combined with the doubling of interest rates in the last 12 months, most locals can no longer afford a single-family home, much less buy a vacant lot and build. It’s worth noting that since the Great Recession, an average of 50% of all transactions have been made in cash with Q1 2023 showing 68% of transactions made in cash.
New home construction hasn’t kept up with demand either as builders have taken years to recover from the Great Recession and then COVID. Today they continue to face shortages of skilled labor, rising material costs from supply chain issues, and a shortage of employee housing, further hindering builders as they increase production. At the same time, locals are holding onto their houses longer as trading up becomes harder to accomplish. Prior to the Great Recession, an estimated 45% of home sales were locally driven.