Benders Landing and Benders Landing Estates Real Estate Market:
2022 – A Year in Review
Happy 2023 Neighbors and welcome to my annual Real Estate recap! The real estate market has certainly been incredibly exciting to watch the past couple of years. While the upward trajectory was both remarkable and financially beneficial for home sellers, it was incredibly frustrating for buyers. Home buyers were having to react swiftly with offers, get creative with offer terms to entice sellers, and given the abundance of multiple offers on homes, they were going above list price, sometimes significantly above. But as you are probably aware, we saw a significant shift during Q4 of 2022.
During the later part of 2022, the real estate market encountered numerous obstacles: lower inventory (number of homes for sale), economic uncertainty due to inflation/potential recession, and higher mortgage rates (the Federal Reserve’s effort to rein in inflation). This “tri-fecta” resulted in the following: a retraction in buyer demand, a reduction of homes sold, and a slower rate of increasing home prices.
Whether you are contemplating selling your home, want to check the status of your “asset”, or you merely enjoy keeping a pulse on our community, let’s take a look at some of the market statistics/trends over the past five years as outlined in the below chart.
|Average Days on Market (of homes sold)||146||115||117||70||36|
|Median home sales price||$670,000||$731,625||$755,000||$932,500||$1,094,750|
|Avg. sales price/sq ft||$157.40||$162.95||$171.94||$204.52||$255.00|
For the first time ever, the median home sales price surpassed $1M in Benders. One reason for this is due to an increase in home prices, but it’s also attributed to an increase in the size of homes and improvements to properties (i.e. pools) over the years, leading to higher valued homes. According to Chief Economist Ted C. Jones, “My personal forecast calls for median prices to dip from 10 percent to 14 percent in 2023 Vs 2022 due to an eroding economy, high rates and affordability issues.” If his forecast holds true, we would expect the median homes sales price for 2023 to be closer to the 2021 figure. This does not mean that there will be a reduction in home prices, instead, this reflects buyer affordability, meaning what buyers can/are willing to spend on a home given the increased mortgage rates. To put this into perspective, there would be approximately a 30-35% increase in monthly payments with an $800k mortgage at current rates compared to rates a year ago, which directly impacts buyer affordability.
The average days on the market fell from 70 in 2021 to only 36 in 2022, representing nearly a 50% drop. What’s even more shocking is that the “median” days on the market was a mere 10 days, which is attributed to the lower home inventory coupled with a high level of buyer demand. With the market undergoing a shift for this year, we are beginning to see the days on market increase.
Year-over-year home sales dropped by 27% to 102 homes, compared to 140 in 2021. While the decline may look startling, keep in mind that this was mostly due to our low inventory of homes that were for sale during 2022. Given the change in the market during the last part of 2022, I thought it would also be beneficial to look specifically at Q4 data. Historically, our Q4 homes sales represents approximately 21% of our annual home sales. However, the last quarter of 2022 represented only 15%, which begs the question: is this due to low inventory or a shift in our market? Unfortunately, only time will tell.
Perhaps one of the more eye-catching figures for most homeowners is the average sales price per square foot of $255, a 25% increase from 2021. This was a dramatic year-over-year increase, again fueled by demand and low inventory, which is highly unlikely to be repeated in 2023.
For the past few months, the Houston area real estate market has been seeing year-over-year weekly inventory (supply) growth. As we enter 2023, Benders has only 7 homes on the market (which ironically is the same number as last January) and another 7 homes under contract. To put this into perspective, for the 5 years preceding the Pandemic, we would average approximately 49 homes on the market at the start of each year. This goes to show that real estate is incredibly hyperlocal (meaning each individual community can have varying trends) and the challenges the Houston area as a whole is experiencing, we are not yet encountering.
The lot market performed much like home sales: lower lot inventory, increasing prices (up 37% year-over-year), and fewer days on the market for lots sold (12 day median vs 17 in 2021). To start 2023, we have 13 lots on the market (7 in 2022) however, the 5 year historical average prior to Covid was 116 properties. We are obviously significantly below the norm so lots should still continue to perform well based on supply and demand.
Real Estate Outlook for 2023:
What is the real estate market outlook for this year? I certainly wish I had a crystal ball for that question! So let’s get some insight to the forecasted outlook provided by economic, mortgage, and real estate experts:
- “While 2022 may be remembered as a year of housing volatility, 2023 likely will become a year of long-lost normalcy returning to the market, . . . mortgage rates are expected to stabilize while home sales and prices moderate after recent highs, . . .”
(National Association of Realtors (NAR))
- According to Rocket Mortgage, “Fannie Mae sees the average rate of a 30-year fixed getting to 6.8% in 2023. Meanwhile, the prediction from Freddie Mac is 6.4%. The Mortgage Bankers Association is the real outlier, projecting the 30-year rate at 5.2% in 2023.”
- “The outlook could turn on a dime depending on interest rates, whether a material recession takes place, consumer confidence and inflation. The U.S. Congress Joint Economic Committee estimates that inflation is costing the typical household in the country $747 more per month to maintain their lifestyle compared to one year ago. At current mortgage rates, the typical household lost approximately $120,000 of loan capacity to purchase a home assuming no change in income. “(Ted C. Jones, Chief Economist, Stewart Title)
Even though the buyer market has retracted from the levels we saw for the past 2+ years, it is still an excellent time to sell due to the exceptionally low inventory in our neighborhood. If you are considering selling your home in 2023, it is extremely beneficial to keep your homes looking as well maintained as possible, as buyers still prefer homes that are move-in ready and preferably updated. Outdoor living also remains a key feature for buyers in our area, especially in today’s environment with families spending more time at home.
As always, let’s continue to take care of our properties and our great community – it benefits us all!
Christine Richards, Benders Resident and Realtor
MBA, ALHS, CHMS