If you’re a homeowner or are planning to become one soon, you’re probably looking for clear information about today’s housing market. And if you’ve turned to the news or even just read headlines recently, you might feel like you’re left with more questions than answers. The best way to make sure you get what you need is to work with an expert.

Why You Want To Lean on a Trusted Professional

With any big milestone in life, it’s wise to seek advice from people who are experts in their field.  While you likely want that advice to be perfect, perfect simply isn’t possible. But professionals have the knowledge and experience to be able to provide you with the best advice for your situation.

For example, let’s say you need an attorney, so you seek out an expert in the type of law required for your case. They won’t immediately tell you how the case is going to end or how the judge or jury will rule. But what a good attorney can do is discuss the most effective strategies based on their experience and help you put a plan together. They’ll even use their knowledge to work with you to adjust as new information becomes available.

Similarly, the job of a trusted real estate professional is to give you the best advice they can. Just like you can’t find a lawyer to give you perfect advice, you won’t find a real estate professional who can either. That’s because it’s impossible to know exactly what’s going to happen throughout your transaction. But an expert real estate advisor knows market trends and the ins and outs of the homebuying and selling processes.

They’ll use that knowledge to explain both the national headlines and what’s happening in your local area. That way, you have the best of both worlds and can feel confident in your decision to buy or sell. Freddie Mac explains why having an expert on your side is so essential:

“The success of your homebuying journey largely depends on the company you keep. . . . Be sure to select experienced, trusted professionals who will help you make informed decisions and avoid any pitfalls.”

With their expertise, a real estate advisor can anticipate what could happen next and work with you to put together a solid plan. Then, they’ll guide you through the process, helping you make decisions along the way. That’s the very definition of getting the best – not perfect – advice. And that’s the power of working with a real estate advisor.

Bottom Line

To get expert advice when you buy or sell a home this year, let’s connect today.

Some Highlights

• If you’re wondering what a potential recession could mean for the housing market, here’s what history tells us.
• In four of the last six recessions, home prices actually appreciated, only falling during the early 90s and the housing crash in 2008. Mortgage rates, though, declined during each of the previous recessions.
• If you have questions about buying or selling a home in today’s market, let’s connect.

Some Highlights

• If you’re wondering what a potential recession could mean for the housing market, here’s what history tells us.
• In four of the last six recessions, home prices actually appreciated, only falling during the early 90s and the housing crash in 2008. Mortgage rates, though, declined during each of the previous recessions.
• If you have questions about buying or selling a home in today’s market, let’s connect.

If you’re thinking about buying a home, you likely have a lot of factors on your mind. You’re weighing your own needs against higher mortgage rates, today’s home prices, and more to try to decide if you want to jump into the market. While some buyers may wait things out, there’s a reason serious buyers are making moves right now, and that’s the growing number of homes for sale.

So far this year, housing inventory has been increasing and that’s making the prospect of finding your dream home less difficult. While there are always reasons you could delay making a big decision, there are also always reasons to consider moving forward. And having a growing number of options for your home search may be exactly what you needed to feel more confident in making a move.

What’s Causing Housing Inventory To Grow?

As new data comes out, we’re getting an updated picture of why housing supply is increasing so much this year. As Bill McBride, Author of Calculated Risk, explains:

“We are seeing a significant change in inventory, but no pickup in new listings. Most of the increase in inventory so far has been due to softer demand – likely because of higher mortgage rates.”

Basically, the inventory growth is primarily from homes staying on the market a bit longer (known as active listings). And that’s happening because higher mortgage rates and home prices have helped moderate the peak frenzy of buyer demand.

The graph below uses data from realtor.com to show how much active listings have risen over the past five months as a result (shown in green):

Why This Growth Is Good News for You

Regardless of the source, the increase in available housing supply is good for buyers. More housing supply actively for sale means you have more options as your search for your next home. A recent article from realtor.com explains just how significant the inventory growth has been and why it’s good news for your plans to buy:

“Nationally, the inventory of homes actively for sale on a typical day in July increased by 30.7% over the past year, the largest increase in inventory in the data history and higher than last month’s growth rate of 18.7% which was itself record-breaking. This amounted to 176,000 more homes actively for sale on a typical day in July compared to the previous year and more choice for buyers who are still looking for a new home.”

The growth this year is certainly good news for you, especially if you’ve had trouble finding a home that meets your needs. If you start your search today, those additional options should make it less difficult to find a home than it would have been over the past two years.

Bottom Line

If you’re ready to jump into the market and take advantage of the increasing supply of homes for sale, let’s connect today. The opportunity is knocking, will you answer?

Whether or not you owned a home in 2008, you likely remember the housing crash that took place back then. And news about an economic slowdown happening today may bring all those concerns back to the surface. While those feelings are understandable, data can help reassure you the situation today is nothing like it was in 2008.

One of the key reasons why the market won’t crash this time is the current undersupply of inventory. Housing supply comes from three key places:

• Current homeowners putting their homes up for sale
• Newly built homes coming onto the market
• Distressed properties (short sales or foreclosures)

For the market to crash, you’d have to make a case for an oversupply of inventory headed to the market, and the numbers just don’t support that. So, here’s a deeper look at where inventory is coming from today to help prove why the housing market isn’t headed for a crash.

Current Homeowners Putting Their Homes Up for Sale

Even though housing supply is increasing this year, there’s still a limited number of existing homes available. The graph below helps illustrate this point. Based on the latest weekly data, inventory is up 27.8% compared to the same week last year (shown in blue). But compared to the same week in 2019 (shown in the larger red bar), it’s still down by 42.6%.

So, what does this mean? Inventory is still historically low. There simply aren’t enough homes on the market to cause prices to crash. There would need to be a flood of people getting ready to sell their houses in order to tip the scales toward a buyers’ market. And that level of activity simply isn’t there.

Newly Built Homes Coming onto the Market

There’s also a lot of talk about what’s happening with newly built homes today, and that may make you wonder if we’re overbuilding. But home builders are actually slowing down their production right now. Ali Wolf, Chief Economist at Zonda, notes:

“It has become a very competitive market for builders where they are trying to offload any standing inventory.”

To avoid repeating the overbuilding that happened leading up to the housing crisis, builders are reacting to higher mortgage rates and softening buyer demand by slowing down their work. It’s a sign they’re being intentional about not overbuilding homes like they did during the bubble.

And according to the latest data from the U.S. Census, at today’s current pace, we’re headed to build a seasonally adjusted annual rate of about 1.4 million homes this year. While this will add more inventory to the market, it’s not on pace to create an oversupply because builders today are more cautious than the last time when they built more homes than the market could absorb.

Distressed Properties (Short Sales or Foreclosures)

The last place inventory can come from is distressed properties, including short sales and foreclosures. Back in the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to secure a home loan they couldn’t truly afford. Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from ATTOM Data Solutions on properties with foreclosure filings to help paint the picture of how things have changed since the crash:

This graph shows how in the time around the housing crash there were over one million foreclosure filings per year. As lending standards tightened since then, the activity started to decline. And in 2020 and 2021, the forbearance program was a further aid to help prevent a repeat of the wave of foreclosures we saw back around 2008.

That program was a game changer, giving homeowners options for things like loan deferrals and modifications they didn’t have before. And data on the success of that program shows four out of every five homeowners coming out of forbearance are either paid in full or have worked out a repayment plan to avoid foreclosure. These are a few of the biggest reasons there won’t be a wave of foreclosures coming to the market.

Bottom Line

Although housing supply is growing this year, the market certainly isn’t anywhere near the inventory levels that would cause prices to drop significantly. That’s why inventory tells us the housing market won’t crash.