Patience Is A Virtue

Dated: July 15 2022

Views: 63

Patience is a virtue, they say. And for the buyers who sat on the sidelines, whether on purpose or because they could not swing the insane real estate market, it is going to pay off. As a follow-up to my May market report, in which I stated  ‘May would be the month the market changed,’ we are seeing that prediction play out. June had a 100.9% increase in active listings year over year, and I predict that is just the beginning. What we are witnessing in real-time, we will all look back at and realize was the slow leak of a once over-inflated real estate market balloon across the Front Range. Sure, we have a 10.3% median price increase on all properties year over year. So, you can make a great argument in this snapshot that it is just a balancing of the market. But you can also feel the change. Every week the active properties increase, pending properties decrease and, as we enter each new weekend, the inventory is increasing.

 

“How did we get here? For the first time in history after the ’08 collapse, the FED played a game called quantitative easing. This kept interest rates artificially low for an extended period of time which brought about bubbles throughout the economy. As the FED decided to end that and move into the new quantitative tightening, bubbles across the economy have begun to deflate. First, we saw the stock market begin to drop, then we watched crypto implode, and then another leak began and it sounds like a real estate leak. We already had an affordability crisis here in the Pikes Peak Region. Once we pushed rates up it cost the average buyer looking at a $500,000 home about $90,000 in purchasing power. Put another way, the $500,000 home now was unattainable to that buyer unless it dropped about 20% in value. We continue to hear that because of low inventory housing should remain strong. But, if demand falls, does inventory matter? In reality, inventory across the country is rising. So, is there even an inventory issue, anymore? Let’s check in on the rest of the items that make a buyer pause and not buy a home. We have consumer confidence at lows, inflation at highs, groceries at highs, gas at highs and the Atlanta FED predicting a -2.1% GDP growth for the second quarter meaning we may already be in a recession. None of this bodes well for housing. 

 

For the first time in many years, I can finish my monthly summary in a different way. Buyers, you finally have inventory hitting the market that you have not seen in years. The inventory is not selling as fast and sellers are price dropping, accepting concessions, and most sellers know that the market has shifted and they are being reasonable. Sellers, for years I have stated it was your market. You continued to get multiple offers, above list and with escalation clauses, appraisal gaps and insane values. But your time has now come to an end. With a balancing of the market you will have to price right, prepare for longer days on market, slower showings and buyers that are not nearly as motivated as they were just three months ago. And, as inventory continues to rise and the overall economy is shaky, there is room for values to continue to pull back. Moving through the end of the year, unless something miraculous happens, there is no good economic news on the horizon. With plenty of bad news likely coming as the overall United States economy continues to grind to a halt, housing is at risk,” said Colorado Springs-area REALTOR® Patrick Muldoon.

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Patrick Muldoon

I have many interests and hobbies to supplement my busy career in real estate. Although I enjoy my work I also enjoy finding free time to enjoy the most important things in life. This includes being w....

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