Drawing comparisons between real estate metrics across different years can be a challenge, particularly in a market as dynamic as the housing industry. Factors such as market variability and unpredictable events can significantly impact the circumstances being compared, making the analysis less meaningful and accurate.
Attempting to compare this year’s numbers to the extraordinary “unicorn” years we recently experienced would be nearly futile. In this context, “unicorn” refers to something highly desired but difficult or impossible to find. The real estate landscape underwent a profound transformation in the past few years, fueled by the pandemic’s effects.
The demand for homeownership surged as people sought homes with dedicated office spaces and spacious backyards. Waves of first-time and second-home buyers entered the market, and historically low mortgage rates plummeted even further. Foreclosure rates were minimized through forbearance plans, and home values soared to unprecedented appreciation levels. It was indeed a market that had long been elusive, akin to a mythical unicorn.
Now, the real estate market is gradually returning to normalcy as the “unicorns” have galloped off. Attempting to compare today’s market to those extraordinary years would be illogical. Let’s explore three key examples:
- Buyer Demand: Despite headlines that may suggest a lack of buyers, the reality is that the United States still sells over 10,000 houses each day. While buyer demand has subsided compared to the “unicorn” years, a closer look at data from ShowingTime reveals that buyer activity remains strong, especially when compared to more typical years (2017-2019).
2. Home Prices: Comparing today’s home price increases to the exceptional appreciation witnessed in 2020 and 2021 would be misleading. Those years marked historic highs in terms of appreciation. By examining a graph showcasing the more typical years (2017-2019), we can observe a return to more normal home value increases. While there were a few months of minimal depreciation in the latter half of 2022, Fannie Mae reports that the market has reverted to more customary appreciation levels in the first quarter of this year.
3 Foreclosures: Recent alarming headlines highlight significant percentage increases in foreclosure filings. However, it’s crucial to contextualize these figures. They represent increases over historically low foreclosure rates. ATTOM, a property data provider, presents a graph indicating that the recent numbers, while higher, are actually returning to the normal filing rates observed from 2017 to 2019.
In conclusion, the housing market is poised to generate unsettling headlines this year, largely due to inappropriate comparisons to the extraordinary “unicorn” years. To navigate this evolving landscape with confidence, it’s essential to seek the guidance of a knowledgeable expert who can help provide proper perspective and support. Let’s connect and ensure you have the expertise you need to make informed decisions.