In 2023, across the foothills market, it was both more difficult to buy and more difficult to sell a house than it has been in decades. Inventory remained extremely low, days on market increased, the quality of listings decreased, and affordability hit new lows – creating a perfect storm for the lowest number of transactions we’ve seen in a long time, primarily due to the effects of the Fed’s decision to rapidly raise interest rates throughout the year. However, the Foothills "Estate Market" – which we define as livable single-family residences on lots of more than 35 acres – remained strong in comparison to the market as a whole, with the same number of transactions in 2023 as in 2022. We also saw transactions actually increase in Q4 as rates started coming down, whereas the overall market continued to see a slowdown. We believe that’s because buyers in the Estate Market aren’t as interest rate sensitive as normal residential real estate buyers – they’re often cash or low debt buyers looking for a forever home and a long-term investment, not a first home, a rental, or a quick-flip.
And, despite rising rates and other economic headwinds, the Foothills Estate Market still has more buyers than we have homes for – now and for the foreseeable future. As a result, our projections for 2024 are very optimistic. We are feeling pent-up demand across all of our markets, from both buyers and sellers. So, we believe that as rates continue to decrease throughout 2024, we’re going to see more listings and more competition for good listings, with multiple offers and over-asking price offers on seller-friendly terms becoming the norm again by summer.
Given this anticipated market improvement, if you’re thinking about making a change in 2024, reach out to us sooner rather than later so that we can get to work preparing your property to list as soon as we see that expected demand surge from buyers, but before sellers follow suit.
DATA AT A GLANCE
In 2023, the Foothills Estate Market remained strong, particularly towards the end of the year – in stark contrast to the market as a whole, which saw interest-rate-related weakness at non-luxury price points and a severe slowdown in the 3rd and 4th quarters. In the Estate Market, we saw 17 closings in 2023 (the same as in 2022), six of which occurred in Q4.
Inventory continues to tighten, with only nine properties active at year-end, compared to 14 at the end of Q2 and 12 at the end of Q3. However, this is still higher than the end of 2022, when there were only 5 active listings. And while inventory is higher than it was during the pandemic boom from late 2020 to early 2022, it is still very low by historical standards.
While the total number of sales in this segment remained steady, homes did take longer to sell in 2023. Average days on the market has increased markedly as continually increasing interest rates have taken their toll, particularly at lower price points (where buyers are more interest rate sensitive). Buyers also currently lack a sense of urgency given the slow market overall.
Most homes that closed in 2023 sold below asking price, some significantly so, with only 4 of the 17 closings at or above asking. Many homes that sold did so after significant price drops (mostly due to initial, aspirational over-pricing).
The Foothills Estate Market saw a new sales price record in Q4 2023 when 1334 South Grapevine Road sold for $14,705,000 (16,000+ sq. ft. on 163 acres).
General market data is interesting, but it’s no substitute for a customized, detailed analysis of your estate’s value. Call us today to discuss what your property is worth and how we believe it might perform in today’s or tomorrow’s market.