The real story on where the housing market is NOW.
In Summary:
- Buyer Demand Then & Now
- Between INFLATION and a hard place…
- A Buyer’s Market Swinging Pendulum
1.) Perspective is everything and CONTEXT is KING. To get the full picture of where today’s demand stands, let’s look at the July data for the past six years (see graph to the right). This makes it clear that, while moderating compared to the frenzy in 2020 and 2021, showing activity is still beating pre-pandemic levels – and those pre-pandemic years were great years for the housing market. That goes to show there’s still demand if you sell your house today.
The Market Stats for Montecito Last Week show it’s still a seller’s market due to dramatically low inventory. It is ever more important to assess and price your home at CURRENT MARKET VALUE, as the demand is still there for properly priced homes, which consequently sell quickly. According to a recent survey from realtor.com, 92% of homeowners who sold in August reported being satisfied with the outcome of their sale.
2.) Mark Fleming, First American Chief Economist, said this week that recency bias is obscuring consumers — and economists — ability to properly contextualize the current market. “I’m always fascinated by the human bias of recency bias, we remember the recent past and think of it as normal, right?” he said. “So 2020 was the best year in a decade, [and] 2021 was even better than 2020. So that was probably the best year ever [for the housing market] in history or recent history to be sure. Now we’re not doing as well as last year.”
“Well, you can’t break records every year,” he added. “Even today, a mortgage rate of six percent is not a particularly onerous mortgage rate. But IT IS if you’re plagued by recency bias. Remember, the anomaly was the last two years.”
Looking forward, we expect the market to keep twisting and turning, with some areas even making the shift into a full-fledged buyer’s market. But, no matter how the dust settles, all agreed home buying and selling will remain a necessity — leaving plenty of opportunities for consumers to succeed.
3.) With inflation a major concern and the costs to build reaching record highs, homes that are updated and in pristine condition are getting
ALL THE ATTENTION. If Buyers can close and then immediately move in, there’s still a premium, but when it comes to homes with outdated fixtures or features, the market shows discounts might be had. Keep in mind that during the pandemic inventory was so low and demand so strong that even less desirable listings were flying off the proverbial shelf. And that was still true even earlier this year — Just 6 months ago people were desperate because mortgage rates were still at 3 percent. In other words, this Seller’s Market persists, but buyers may be able to find specific properties or areas in which they have considerably more leverage. So, you could say a neighborhood is hot, but it might not necessarily be the neighborhood. it might just be the property. (JIM DALRYMPLE II, Inman)
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