With listing activity down sharply this month, the market came back swinging toward sellers' favor in our latest figures.
Although the average sale price was down by 2% since January, it remains level with last year. The average Staten Island property sold for $614,253 in February, neck-in-neck with February 2021’s average price of $613,564. Most people will fixate on sale prices. But price is a trailing indicator.
We can predict the future in a way if we look at certain numbers. New real estate listings dropped by a full 32% to just 381. This is concerning since February and March kickstart the spring listing season. Last year, 560 homes were listed in February.
Next, let’s look at active inventory. Total active listings dropped 25% over last year, from 2,055 in 2020 to 1,553 in 2021. Keep in mind this figure also includes any pending listings already spoken for. This large drop in housing stock means buyers will have fewer choices and more competition when shopping for a home.
While listing activity slowed, home sales rose by an even larger margin of 29%. This February, 370 home sales closed in Staten Island. Last year just 287 homes sold during the same month. Coupled with the reduced inventory, this demand drives the price up further.
Another indicator of market health is days on the market. This measures how long it takes the average house to sell. Cumulative days on the market fell 14% from last year. It took 104 days (or 3.5 months) on average for a home to sell. One year ago, home sales took 121 days (4 months). Speedier home sales also put markets in the sellers’ favor.
This increased competition leads to bidding wars and ultimately higher offers. The age-old supply and demand rule will drive prices up with higher demand. However, there is one very important factor not reflected here which could greatly impact the sale price: mortgage rates.
Mortgage rates have risen sharply by almost a full percentage point over their all-time low. A 30 year fixed rate mortgage will now carry an interest rate of 3.17%. Some estimates were as low as 2.25% earlier this year. In turn, refinances are far less attractive, having fallen more than 60% since July.
This complicates things because of home affordability. A full percentage point rise means tens of thousands of dollars over 30 years, in addition to a higher monthly payment. So on the one hand, the housing shortage drives prices up. On the other hand, prices can only go so high before buyers can’t afford them.