It’s the dog days of summer, and the real estate market is generally as it is this time of year, but just a little bit slower. Typically, the market sees less activity in August – people go on vacation, the showings slow, and prices moderate. Nothing to be concerned about, but the difference this year is the market was so fast-paced the first five months that it seems like things are drastically slow now.
The good news is that we have settled into a more “normal” market. The initial shock of the changing market has worn off. Inventory levels have stabilized, prices are settling, and buyer demand remains active. The weekly absorption rate of sales this year is 19% which is good, relative to other non-pandemic years. For comparison, the rate in 2019 was 18%, in 2018 it was 15% and in 2017 it was a mere 12%. What we need now is for seller expectations to be in line with where the current market is. It will take longer for houses to sell; there are fewer buyers in the market due to rising rates, rising prices, and buyer fatigue. The great news is that there are still buyers in the market. There is no bubble and prices are not crashing.
Why you may ask? Today (versus the Great Recession), we have 5 million more buyers in the first-time home buyer age bracket (28-32) and there are 12 million more household formations. Additionally, the number of homes for sale was 3.7 million nationally in 2008. Today we have under 1 million. Builders only build when they have a buyer – they are not building spec homes like they were before the Great Recession. The overall numbers reflect a better market for both sellers and buyers. The frenetic pace from November through the end of April was not sustainable, nor was it healthy.
So, what’s next? We will have a market where buyers will have the ability to take their time when deciding to buy. When they do write contracts, they will have contingencies in them. There will still be some homes that sell quickly with multiple offers, but it won’t be like it was a few months ago. I want to reiterate that this is a good thing for everyone, as we have seen issues with people who bought homes sight unseen, didn’t do inspections, or have appraisal contingencies.
The bottom line is that if you are looking to sell or buy, you need the advice of a trusted professional. Call me to discuss your situation in more detail. I am here to help!