Compiling Narrative for Current Real Estate Market

Mortgage application rates are down. Rates are nearing a 3 month low. Pending sales have been cut in half. We’ve been saying this for a long time, but the market continues to get weirder and weirder every day.

A lot of buyers have burnout. The days of “bids” appears to be over. However, there are still plenty of buyers who still want to get in to the market. Sellers are just needing to work harder in order to get more buyers to their property.

I think the hardest part of all of this is learning to remember what a “normal” market is. This means 3-6 months worth of supply. This can mean price reductions. This can mean negotiating. All of these factors are variables that contribute to a normal market. We just haven’t seen one in almost 5 years and we’ve all forgotten what that looks like.

I also think it’s important to say “normal” because the other option for a market that is beginning to slow down leads people to think that a crash is coming. The difference between then and now are the lending restrictions. Gone are the days of “no money down” lending. Naturally, people have quite a bit of equity in their homes. The equity in homes now isn’t just because housing values have increased by about 50% or more since 2019.

The other factor that makes this different from the recession is that there is still plenty of buyer demand. Buyer demand is largely limited to the entry level market. It is likely to sustain as unemployment remains low.

Ultimately, it’s weird to try to adjust to a “normal” market after nearly 4 years of what has been an absolutely absurd/crazy market. Historically low interest rates, 20% year over year growth, why wouldn’t this lead to a nutty market? The hardest part for all parties involved is to remember what a “normal” market feels like: some days on market, some price reductions, some negotiations, all of which contribute to an overall “normal” market.