We are now in the fourth quarter of 2022 and the real estate market has been wild so far this year. Hey everybody, it's your friend, Kyle Winn, and if you’ve never seen any of my videos I help people just like you buy and sell homes in places like Canyon Lake, Menifee, Lake Elsinore, and the rest of Riverside County. Now I'm extremely excited to bring you your Q3 market update report for 2022 because we're here in early October, so quarter 3 of 2022 has come and gone, and I'm excited to tell you all about the market trends we’re seeing now. I'm also going to compare these to what we saw for the first half of the year and give you some trends and some insights as to what might be happening in our market here going into the last few months of the year. Let’s dive in!
Well, thanks so much for stopping by because I'm really excited to bring you your Q3 market update report for Riverside County here in 2022. I’m going to give you an overview of what's happened in Q3 and compare that to the first six months of 2022, and see if we can figure out what will happen from now until the end of the year.
So the number of new listings hitting the market each month tended to increase over the first half of 2022 to its peak in June at 4463 new listings, but since then this has decreased every month to just shy of 3000 new listings in September. Over the last five years or so we’ve typically seen about 4000 new listings in September, so we can say that new listings are down about 25% for this time of year. This definitely won’t help the housing supply issues I know we’ve all heard of over the last couple of years.
Now the number of monthly closed sales increased quickly at the beginning of the year to its peak in March at 3693, but has declined every month except for August to a low for the year at just 2348 in September. This is the lowest number of closed sales we’ve seen in one month since May of 2020 at just over 2000 closings, and that was obviously due to the shutdowns resulting from COVID-19.
So what if we compare this number of closed sales to the number of new listings that I just told you about? Well both of these figures were at a low for 2022 in September, and they’ve trended downward by a similar percentage. So although we have less supply, which is our new listings, we also seem to have less of a demand in the number of closed sales. Overall the market appears to be slowing down as a whole, which means it can take longer for a new listing to sell.
Speaking of that, the median number of days on market for properties here in Riverside County was at 16 days in January, down to just 10 days from March through May, but then has steadily increased since then to 26 days in September. Now over the ten year span of about 2009 to 2019, which for the most part was a rather balanced market, we would expect the median number of days on market to be between 30 and 60 days. So even at 26 days homes are still generally selling pretty quickly.
Have you heard the term “balanced market”? This is when the market conditions don’t necessarily favor sellers or buyers, and the way we determine that is by what we call the months’ supply, which is how long it would take to sell all the properties that are currently listed if no new listings came on the market. At the beginning of 2022 we saw the months’ supply dip to a record low for Riverside County at only 1.3 months! Since then the months’ supply has slowly increased to 2.5 months in September.
Now those numbers may not mean that much to you, yet, but over the previous five years or so, the months' supply that we've typically seen has been between four and six months, which I would consider to be a healthy, balanced market. Knowing that the current months’ supply is at 2.5 months, which is below what we would typically expect, but that it is also trending upward, we can see that we are shifting away from such a heavy seller’s market, and toward a more balanced market, which is great news for you buyers out there!
The average sale price of the homes in a given market tends to be a popular topic, so let’s see what that is doing here in Riverside County. The average sale price was at an all time high of $653k in January to start off 2022, which actually increased to its peak at $711k in April. Then the average sale price decreased to $637k in July, and has held fairly steady since then and was at $640k in September. Now the fact that the average sales price is down about 10% compared to 5 or 6 months ago may surprise you, but it isn’t too shocking in my mind. Every year the average sale price tends to peak between April and June, and it is not uncommon for that to decrease 5 - 10% until it bottoms out for the year between August and October. We may expect the average sale price to decrease a bit more over the next month or so, and if history repeats itself the average sale price will begin to increase again late in the year and into 2023. Regardless, even with the decline in average sale price from earlier this year, it is still higher than any time before 2022.
Mortgage interest rates are constantly headlining the news, so let’s talk about that for a second. We started the year with the average 30 year fixed mortgage interest rate at 3.45% in January, which increased every month to a bit of a peak at 5.52% in June. We saw a little relief in July and August, and since then it increased to 6.11% in September, on average, but they did hit 7%. Here in the first week of October we’ve seen rates around 6.65% or so. If you’re curious about WHY interest rates have been changing so much, and HOW you can beat these higher interest rates, you can watch my video about exactly that, which you can find right up here (point to top left) if you’re on YouTube, or if you’re not, go ahead and visit my YouTube page and check it out. I just released that video on September 30th.
I think it’s an understatement to say that this has been a crazy year so far for real estate. From interest rates at 3% and homes selling well over asking price, to interest rates of almost 7% and some homes sitting on the market for months! I wish I could tell you exactly what’s going to happen in the market over the next few months, but what I can say is to keep an eye on mortgage interest rates and the months' supply of active listings, not only in our area, but across the whole nation. Well for now that wraps up my Q3 market update, so leave me a comment if you have any questions.
Any questions? Reach out to me directly at Kyle@SoldByKyleWinn.com or by calling or texting 951-852-9980 any day of the week!