August adds a few more sales to the 2022 residential real estate sales. However, it’s not enough to change the path of slow real estate sales in Breck and other Summit County towns. Higher interest rates, concern about the economy and low inventory levels are keeping buyer demand low. We are seeing pressure on pricing but it’s not too significant yet.
Residential real estate sales in August
With 152 residential sales, August had the highest number of sales of any month so far in 2022. Even so, it isn’t enough to change the slow real estate sales we have been seeing nearly all year. That’s because we haven’t had so few residential sales in August in a decade. August sales in the 200s is a more typical number to see. So far, when looking at number of sales, this year is looking to be comparable to 2013. If this lag continues for the rest of the year, which I expect, we will be lucky to end up with 1500 residential sales in the county this year. That’s about a 30% decrease from the last two years. And more like a 15% decrease from pre-pandemic sales.
The Fed raises rates again
On September 21st, the Federal Reserve Bank Chairman announced another increase in interest rates, this time by 3/4 of a percent. The Fed rate is not directly connected to mortgage rates. However, it is indirectly related. I am not an economist but do think it’s a relatively safe bet to assume that an increase in the Fed rate will result in a mortgage rate increase, especially when the Fed rate is jumping .75%. When we are seeing mortgage interest rates doubling this year, it is no surprise we are seeing slow real estate sales. Typically, only 25-30% of the residential sales in Summit County are cash.
The increase in the central bank interest rate is a response to the high inflation we are seeing. Coupled with a number of other factors, these rate increases are likely to cause a slow down in the economy and, perhaps, a recession. Uncertainty causes hesitance and, therefore, slow real estate sales
Even with slow real estate sales, inventory is not building much. Summit County’s residential inventory has been sitting around 450 all summer. That’s about a 3 month supply. Last year we had about 170 properties for sale and 207 sales. That’s less than a 1 month supply. In 2013, the year we are comparable with for sales, there were about 1350 properties for sale. That’s about a 9 month supply. When comparing this year to previous years, we can see that the market has slowed considerably. However, we are not back in 2013. Inventory remains tight,