It’s not the white-hot market from earlier in the year & it’s not the 2020 market benefiting from a wave of pent-up demand but make no mistake this is still a hot housing market.Odeta Kushi, Deputy Chief Economist at First American
I pulled this quote from the good people over at Keeping Current Matters (KCM) and I’ll share the full article in a bit. However, this quote is so important to bear in mind with what’s happening in the current housing market, both nationally and within the region.
We have been in a seller’s market for quite a few years. In fact, the median sales price has risen over 130% in American Canyon over the last decade:
There have been a few blips along the way, but – for the most part – the American Canyon real estate market has steadily grown. The same holds true for the rest of the region. Why has the American Canyon market grown so steadily? The answer is the same as why there was such a run up on housing prices last spring: supply and demand.
As the graph above shows, the number of active homes on the market dropped significantly from Q3 2011 to Q1 2012 and it’s never really rebounded. What happened? The distressed housing stock largely ran out of inventory. The country, state, and region moved through the worst of the Great Recession and started to come back. Since the beginning of 2012, there has only been one (1) time where there were over 30 active homes for sale and only four (4) times where there were more than 25. There just isn’t enough housing stock to go around for all of the interested buyers.
At this point, it doesn’t appear as though we’ll be able to build our way out of this regional/national malaise any time soon. The cost of new construction for the smallest home in Fairfield starts at around $655,000. For many, this is unattainable. Here’s the 30,000 foot view from the folks over at KCM:
What Do Past Years Tell Us About Today’s Real Estate Market?
As you follow the news, you’re likely seeing headlines discussing what’s going on in today’s housing market. Chances are high that some of the more recent storylines you’ve come across mention terms like cooling or slowing when talking about where the market is headed.
But what do these terms mean? The housing market today is anything but normal, and it’s still an incredibly strong sellers’ market, especially when compared to the few years leading up to the pandemic. With that in mind, what can previous years tell us about today’s real estate market and if it’s truly slowing?
We’re Still Seeing an Above Average Number of Sales
You may see headlines about a drop in home sales. But are those headlines telling the full story? The most recent Existing Home Sales Report from the National Association of Realtors (NAR) does show a drop of about 2% from July to August. But the month-over-month decline doesn’t provide the full picture (see graph below):As the graph shows, historical context is key. Today’s home sales are well ahead of some of the more normal years that led up to the health crisis. That means buyers are still in the market, which is great news if you’re planning to list your home.
Houses Are Selling Faster Than Usual
When headlines mention the market is slowing, sellers may naturally wonder if their house will sell as quickly as they’d like. According to the most recent Realtors Confidence Index from NAR, homes are still selling at record speed (see graph below):Again, if we look back at data from previous years, we can see the average time on market – 17 days – means homes are selling faster than a normal pace.
Bidding Wars Are Still the Norm
The Realtors Confidence Index from NAR also shows a drop in the average number of offers homes are receiving in August, and many headlines may simply focus there without providing the important context (see graph below):Again, it’s important to compare today’s market to trends from recent years. Currently, the average number of offers per listing is higher than 39 of the previous 45 months. That means the likelihood of a bidding war on your home is still high. And the number of offers your house receives can have a major influence on the final sale price.
So, Is the Market Slowing Down?
While there are slight declines in various month-to-month data, it’s important to keep historical context in mind when determining what’s happening in today’s market. Odeta Kushi, Deputy Chief Economist at First American, put it best recently, saying:
“It’s not the white-hot market from earlier in the year & it’s not the 2020 market benefiting from a wave of pent-up demand but make no mistake this is still a hot housing market.”
Don’t let headlines make you rethink listing your home this fall. Selling today means you can still take advantage of high buyer demand, multiple offers, and a quick sale. If you’re thinking of selling your house, let’s connect and discuss why this fall is the perfect time to do so.