Spring Has Sprung, but Housing Hasn't

Dated: May 13 2023

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Spring has sprung, but housing hasn’t. The real estate industry was waiting for spring. Rumors and speculation on social media were that spring would bring sellers to the market and buyers would jump back in as prices had seemed to stabilize and interest rates had pulled back. Social media would have given you the impression that all homes were seeing multiple offers and that buyers should consider jumping back in now because this market was heating up. And for many homes that was true. But the overall truth seems a bit dimmer to me.

 

“The one-year change on sold listings dropped a whopping 31%, a trend we continue to see month over month from the previous year. Hardly a barn burner number despite historically low inventory. We are now pacing with 2015 numbers. And the median price dropped 5.3% year over year. So, despite some properties seeing multiple offers and the industry making it seem like this year is on fire via social media, the numbers just do not show that. I would compare this to any company that tracks numbers. If widget A is setting record sales, but overall, the company reported a 31% drop in overall widgets sold, that would still be bad news. So yes, some homes are seeing multiple offers, but there is no question that both REALTORS® and lenders are feeling this squeeze. 

 

“Will inventory increase as we move through the spring into summer? Inventory is now up 31% year over year, and I suspect that will remain elevated compared to last year. But the Achilles heel is interest rates which remain high and housing affordability remains out of reach for many. The Federal Reserve continues to raise rates putting more pressure on debt that many carry in the form of credit cards. Inflation remains an issue and the overall cost of living is elevated. While many across the country and in our industry believe that housing is safe from a crash, I lean on the side that unemployment is going to spike and that is going to leave a different landscape for housing. In its history, the Fed has proven that it misses signs the economy has taken a turn towards the worse, and by the time they react to it, it’s too late. If unemployment remains low, housing seems relatively safe from a massive drop in values thanks to low inventory. But if unemployment increases look for downward pressure into next year as the economy shifts. We are running a country with historic debt at every level and the world economy is showing signs that we have a storm ahead. We have bank failures in the news, corporate bankruptcies increasing, and layoffs being reported, and I have a hard time believing that leaves housing untouched. But we will track the data and see where that takes us,” 

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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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