It has been a confounding year so far in the River Oaks real estate market. And, when perplexed, there is a tendency for the market participants to grab at headlines in an attempt to make sense of it all. On everyones lips are phrases like high interest rates, recession coming soon, mid-sized banks and low inventory levels.
Simultaneously one hears of high prices due to a lack of houses for sale, even while higher mortgage costs/the fear of looming recession is finally causing a retreat of high prices.
It cant all be true. Or can it? Lets just say that its more complicated than that, and its certainly a bifurcated market.
Inventory and Sales
Lets first address the inventory myth.
You have often read here that River Oaks is an inventory-driven market. A good supply draws the buyers into the market. So far in 2023, overall inventory in River Oaks at any given time has been significantly lower than in recent years.
And yet the inventory has been turning over at a sufficient pace to produce a perfectly respectable level of sales.
True, the 19 transactions through the end of April of 2023 are fewer than for the same period of 2022, and certainly far behind 2021. (Ah, 2021 those were the days!)
But if you look at the total number of transactions thats including houses and lots on MLS, plus a small handful of private transactions youll see that the numbers are up for 2023 for both number of transactions and the total sales volume.
A little more concerning is the current state of inventory when compared with pending contracts.
The lower and middle sectors of the market seem to be pulling their weight, but the high end is looking rather flaccid with copious inventory and just one pending contract that has been unable to actually close for months.
Whats Really Happening in this Market
At lunch recently with a client and friend hes what my parents generation would have called a stockbroker we were discussing the mixed signals in the news and how we make sense of it all in order to provide our clients with sound advice.
My friend and I agreed that we have a low tolerance for risk, especially when it comes to other peoples money. And that the only formula for a good nights sleep in a transitioning market is to crunch the numbers and analyze market forces. Both of us rely on a clientele that does not appreciate the seat-of-the-pants school of stock market investing or residential real estate.
Speaking of which, it was telling to note that the four recent-construction resales (by sellers who had relatively recently purchased spec houses) so far in 2023 have resulted in losses for the sellers. That is consistent form.
Which brings us back to how this is a bifurcated market: Those sellers of recent construction could probably afford to take a loss as annoying as it must be to do so. By the same token, many of the sales in 2023 that caused eyebrows to be raised were also completed by buyers who could afford to pay a premium. All that extra money that is sloshing around in certain circles allows for such indulgences.
For everyone else, however well-to-do they may be, there is a determination to be cautious and conscientious in their real estate decisions.
Those two very different tendencies define our current market, sending conflicting signals to buyers and sellers.
We encourage you to contact us if you wish to sort out the wheat from the chaff.
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