LandVest Sees Growth in Inventory, Transactions, Dollar Value
By Slater Anderson, Vice President & Managing Director of Real Estate
We enjoyed a strong start to the year in terms of transactions, dollar values, and listings—all of which increased year-over-year from 2023.
LandVest’s inventory grew 33 percent in Q1 year-over-year, a performance that easily outpaces the national number of 23.5 percent. This strong effort filled our pipeline to its highest level since September 2021. In April 2024 we had 170 active listings, up from 129 in April 2023. Nationally inventory is creeping upwards but it remains about 38 percent below pre-pandemic levels.
Our average sales price of $2.27M in 2023 showcases LandVest’s strong position in the national luxury market—falling right between average sale prices in The Hamptons, NY and Palm Beach County, FL from Q1 2024. The volume and average price of our properties should rise moving through Q2 and beyond as the Northeast’s seasonal markets heat up with the weather.
New England Home Values Rising, Inventories Remain Tight
Home values across the northern United States are rising at the highest rates in the nation. Among the top U.S. metro areas in home value growth, Hartford was first and Boston fourth according to the Zillow Home Value Index through March 2024. During Q1, 14 of the nation’s top 20 metro areas for price appreciation were northern metro areas.
According to the National Association of Realtors, Existing Home Sales for March 2024 showed stronger activity in lower priced cohorts. About 68 percent of the month’s sales were under 500K, while only 14 percent of existing U.S. home sales in March were over 750K, which is the segment of the market in which we operate. However continued price appreciation means the number of sales in the lower cohorts will be dropping, and more inventory should be available in the higher cohorts.
Inventories remain tight, especially in $1M+ market. Although New England saw more 1M+ properties on the market in April 2024 versus April 2023, sales volume increased over this time, so that Months of Inventory actually declined year-to-year above $1M. It continues to be a good seller’s market.
Broker Sentiment on Buyer & Seller Activity
Relying on our monthly survey of broker sentiment on Buyer and Seller Activity, we’ve charted the responses over the past 15 months back to Jan 2023. Seller sentiment has not been great over the past 15 months. In November of last year, a plunge in the S&P and high mortgage rates led to a pessimistic broker view of sellers, but since then broker sentiment for seller activity has been moving in a positive direction. Broker sentiment on buyer activity saw gradual improvement—until the Realtor Settlement was announced which dampened broker sentiment about future buyer activity.
High Rates Remain a Challenge, Timing of Cuts Uncertain
High interest rates continue to weaken buyer demand and produce headwinds in the market. The effective interest rate on outstanding U.S. mortgages is 3.8 percent—which is just HALF of current mortgage rates of 7.5 percent.
- 90 percent of borrowers pay interest rates below 6%
- 80 percent of borrowers pay interest rates below 5%
- More than 20 percent of US homeowners pay mortgage rates below 3%
It’s uncertain when the Fed will act to cut rates. At the beginning of 2024 multiple rate cuts seemed certain and the market had priced in more than half a dozen. Unfortunately, the outlook has shifted. The Chicago Mercantile Exchange’s Fed Watch estimates that a rate cut is only 18 percent likely at the June 12 Federal Open Market Committee meeting, 44 percent at the July 31 meeting, and 68 percent likely on September 18. Currently, the market is pricing in just 1.3 rate cuts this year, so this challenging environment is likely to continue.
The 2024 Outlook by LandVest
The 2024 Outlook by LandVest is a series of analyses and insights on the investment land and luxury residential markets. The Outlook is informed by performance in our land, residential, and fiduciary consulting business units. Next in the series, Ruth Kennedy Sudduth, Vice Chair, shares her thoughts on the luxury market and outside influences, resources, and more.
