Other than Pasta Bolognese, my favorite Italian meal is Spaghetti alla Carbonara. When prepared correctly, it’s decadent- silken noodles coated in a rich, creamy cheese sauce with whispers of bacon. There are really only six ingredients and it takes almost no time to make- the secret is in the preparation. Several years ago, I was racing to finish this dish for some friends and couldn’t understand why the sauce wasn’t thickening. Oops- I had accidentally turned off the flame on the stove and, rather than transporting my guests to a quaint Roman trattoria, I found myself serving a gelatinous mess that I imagined to be commonly found at the buffet of some cheap all-you-can-eat diner in Immokalee, Florida. Sometimes business behaves in a similar manner- you leave out one key element and your intended results don’t quite materialize. Well, that’s precisely what’s been happening to me in the first few weeks of this new year.
Throughout the final quarter of 2022, I was completely focused on preparing for the year to come. So much so that I didn’t begin to enjoy the holidays until I left the office at 3:00 on December 23rd. During the last few months of 2022…
- I hired a new COO and a new social media coordinator
- I purchased, renovated, and furnished our new office
- I worked with our executive coach to help the team with some continuing education
- We created a few new processes and added some new technology to enhance our client’s experience
In other words, I was prepared to start the new year “hot” and crush the market. Unfortunately, there was one thing missing- inventory. Currently, in Monroe County, there are only eighty-one existing single-family homes on the market for sale priced above $200,000. Eighty-one. Meanwhile, since the start of the year, I’m fielding four or five phone calls every week from buyers looking to purchase. As we’ve stated, this is a market populated by those who have to buy or sell. Most of our buyers have recently moved into Rochester from outside of the area and need a house to purchase. Unfortunately, most sellers are remaining in place because they fear that they’ll have nowhere to move to and, if they did find a place, why would they want to trade a mortgage rate that was locked in at 3.0% for one that is currently pegged at 6.25%?
Thankfully, I was born to look at any glass as being more than half-full and I remain hopeful for this year’s market. Specifically-
- Remember Adam Smith who told us, back in the mid-1700s, not to fear this moment. Demand far exceeds supply, ergo, home prices will not correct
- The Federal Reserve is taming inflation. The CPI hit 9.1% in July and dropped to 6.5% in December
- Increasingly, it looks as if we will not experience a long or deep-seated period of recession. Unemployment numbers and the GDP both remain strong
- Given that the housing market contributes between 17% and 20% of the total US economic output, the Federal Reserve needs to ensure that an anemic real estate sector doesn’t drag the rest of the economy into the bowels of recessionary hell. Stated another way, I’m convinced that they’ll do something to make sure that this sector of the market recovers.
- That “something” means that mortgage rates will continue to decline. They’ve dropped more than a full point since hitting their high back in October. You can expect rates to fall below 5.5% before year’s end- very possibly sooner.
Based on these factual bullets, I’m speculating that inventory levels and the market, in general, will start to recover mid-year.
So, what’s the smart play? If you’re a seller and you’re able, list your house for sale NOW. Buyers are anxious and bidding wars continue to define the market. If you need, you can probably negotiate a six-month closing which is probably plenty of time for you to find a new residence. If you’re looking to purchase, start your search sooner rather than later because the process will probably take longer than historic norms would suggest.
Despite everything that I’ve just stated, my team and I remain busy. Without listing properties for sale, we’ve very successfully introduced several recent transplants to sellers who needed to move. As a result, our sales are up an astonishing 62%. Sure, cumulative totals are small during the first few months of the year, nevertheless, we’re excited and hope to continue to buck the trend. If you’d like to talk about your real estate needs, give me a call. I’d love to hear from you! 330-8750
Meanwhile…
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