As we step into the summer months of 2023, the real estate market continues to be driven by the ongoing challenge of limited inventory. The impact of the summer lull on the market will be observed over the next two months. Presently, there are no indications of a deceleration, as the demand for houses greatly exceeds the supply. Multiple offers have become the norm, resulting in a significant number of homes closing in June at or above their asking prices. Additionally, the month supply of inventory remains below the balanced market level of six months, with most towns well below a three-month supply. As we look ahead, interest rate forecasts indicate an increase in the coming months, prompting many buyers to purchase now and refinance later. Let’s delve into the details of the second quarter 2023 real estate market update.
Limited Inventory Drives Competitive Market
The primary driving force in the second quarter of 2023 real estate market is the persistently low inventory levels. Despite the typical summer slowdown, the demand for homes continues to outweigh the supply. Buyers are facing fierce competition, leading to a surge in multiple offers on properties. In June, an average of 72% of homes closed at or above their initial asking prices across various towns. This high level of competition showcases the intensity of the current market environment. Inventory is down year over year in Fairfield (-13.0%), Westport (-17.4%), Easton (-14.3%), Weston (35.6%) and Wilton (-26.6%).
Month Supply of Inventory and Market Behavior
The month supply of inventory is an important metric in understanding market behavior. In the second quarter of 2023, the month supply of inventory remained below the balanced market level of six months. Most towns are experiencing inventory shortages, with a significant number having less than a three-month supply. This scarcity underscores the challenges faced by buyers in finding suitable properties and further contributes to the competitive nature of the market.
Interest Rate Forecast and Buyer Strategies
Looking ahead, one key factor that many have assumed would impact the real estate market is the forecasted increase in interest rates. There has not been a reduction in home purchases due to high interest rates. Many buyers have made the decision to purchase homes now and plan to refinance later. This strategy allows buyers to secure a property at the current low interest rates before they potentially become less favorable. It is a proactive approach to save on long-term financing costs and take advantage of favorable market conditions.
Navigating the Market
Given the high demand and limited inventory, it is crucial for buyers to be well-prepared and proactive. Staying informed about local market conditions, working closely with real estate professionals, and having pre-approved financing in place are essential in this competitive market.
Buyers need to act swiftly when desirable properties become available to increase their chances of success.
For sellers, this market presents an advantageous opportunity. Setting a competitive yet realistic asking price and partnering with an experienced real estate agent can attract motivated buyers and maximize sale prices.
Navigating this market successfully requires being well-informed, proactive, and working closely with your real estate professional. Call me to start your journey!