The second week of January our team got together for breakfast. Before the coffee was even poured we started making market predictions for 2023.
Everyone piped in echoing how slow sales had been over the last four months. Even when Hania mentioned a new listing that sold faster than expected, we quickly circled back to the slowing market conditions we were seeing:
• Interest rates increased
• Buyer activity slowed
• Inventory levels increased
• Days on Market got longer
• Prices softened
Not only that, layoffs seemed to be happening everywhere. The real estate industry was especially hard hit. These trends are typical of a cooling market. A welcome sign for our buyer clients.
With all these data points, we anticipated 2023 to be a good year for buyers. We suspected things would remain slow in January and February, then we’d get our typical spring bump, followed by things settling back down in the summer and cooling off even more in the fall.
One week later our predictions completely changed!
First, we had eight carry-over buyers from 2022 who were ready to pick up the pace and get something under contract. Then, six new buyer clients reached out to hire us. All of them were motivated and ready to go. This is a lot of buyer clients for January.
Second, we listed a $839,000 condo in downtown DC. The market stats suggested that the market was sluggish and that it could take some time to sell. Instead, within days we received three offers, all above list price.
Third, We listed a $1,279,000 detached house in Bethesda. Again, the response was much stronger than anticipated. Six offers came within three days and it went under contract significantly above the list price.
We were not alone. Many of the agents we work with reported similar happenings.
Where did all this buyer demand come from?
Why did the 2023 January market start off much stronger than anticipated?
There are two clues in this story that help answer these questions.
First, a higher than normal number of carry-over buyers from last year. These buyers started their search in 2022 and then slowed things down as the market changed. Many of them resurfaced in January.
Second, is to understand the pre-existing inventory. Many buyers are not happy with the current selection of homes that have been sitting on the market. So even though inventory levels are increasing, the buyers don’t seem to like the available choices. As the inventory levels build it creates the sense of a softening market, however, as soon as a hot new, well priced listing hits the market everybody jumps in and voila… multiple offers.
Even though the end of year data suggested a cooling market, we experienced a January surge much hotter than expected. Based on the intensity of this recent market rush, we anticipate a hot sellers’ market through the spring.
