August 2022 Market Update

by Guy Lofts

Labor day is upon us, summer is at an end.

We hope that you had a wonderful summer. Traditionally there has been a slow down in the market after a busy spring market. We often go into the fall with renewed market activity. So how does this year compare? Are we seeing a bubble? Or a buyers market?

So what is happening. Compared to 2020 and 2021, Dane county home sales are down 20%, they have been down all year. However Prices in July are up 12.3% from the same time last year.

This is not a sign of market weakness, rather a lack of good inventory. The number of new listings is down 25% in July, and 9% for the year. In Dane county there is 1 months of inventory, and in Madison more like 15 days. Homes are selling on average in 8 days on market.

As you likely know, interest rates have increased significantly. Rates are in the 5-6% range, which is twice as high as earlier in the year, and this is dampening affordability. Remember, this is still historically below average.

How is this affecting sales?

Certainly, there are some buyers who have pulled back and competition is not quite so intense however here are some stats for Madison in the last 2 months i.e. since July 1st.

Inventory is still 15 days (6 months is a normal market). The average days on market is 13 days (the average for the year was 8 days) and the average sale price was 8,000 above listing price. All of these stats, indicate we are still super competitive. Now we do know that some homes are sticking and subject to a price reduction. Generally, these are home owners who are looking to take advantage of the market and are too aggressive, and just a bit late for the spring market.

In conclusion....

The market is still excellent for selling. We are coming into a new fall market.

At the same time, it is a great time to buy. This season is traditionally lower buyer competition, and Yes rates are higher, but supply of buyers is so strong that there will be continued pressure on sales. Prices will still continue to rise, albeit at lower rates.