Here are just a few headlines after a quick Google search for “real estate market.”
- “Feds damage to the housing market may last years”
- “U.S. facing a ‘perfect storm” for 2008-like housing crisis”
Let’s get this out of the way first: the real estate market is slowing. The volume of sales (number of homes) has fallen off a lot and that is what is grabbing the headlines, but values are actually up. I have been on record in a lot of places (now here officially) that we’re also going to see price decline at some point (when pressed, my guess is 2023, but if I really knew for sure some hedge fund would be paying me a billion dollars). Price decline will actually be a good thing. Anything that grows too fast is unhealthy. We need things to slow in order to rebalance the market, but let’s look at just a couple of data points that help tell us where we are right now.
You might be thinking, “Uncle Keith, all those headlines you showed us made it sound like real estate was crashing.” Yeah, I know, but it’s not. It’s leveling off. We’re seeing a flattening in price apparition being reported like a downturn. We’re seeing the first ever so slight dip in median sales price. Let’s see how the trend line continues. I personally see it staying flat for a bit then starting to tail off, which as I said above, is good.
Total listings are down but new listings are up… how does that happen? Well, dear reader, it is simple: you’ve got aged inventory sitting on the market. New listings are coming on the market, and the properly priced listings are selling, but gone are the days of throwing anything on the market at any price and letting the real estate gods sort it out. Skill is back in the market place. How you market the home matters again, and more importantly, how you price the home matters again too. Beyond all the real estate headwinds we are seeing (and have talked about), you’re also seeing the early phases of seasonality.
In summary:
- The market is cooling… quickly.
- Home price appreciation is starting to tail off.
- Now more than ever in the last three years you’ve got to be thoughtful about how you approach the market if you’re selling.
All of this is overall healthy for the real estate market, if somewhat painful for the industry.