All of the headlines about conditions in the current housing market may leave you with more questions than answers if you have been following the news. Is the boom over? Is the market crashing or correcting? Here’s what you need to know about the direction of the housing market.
For the last two years the housing market has been moderating, but what everyone needs to remember is that the past two years were record-breaking. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.
This led to record-high demand and record-low supply, and it’s not sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:
“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”
Home Showings Before and After
The ShowingTime Showing Index tracks traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):
The same scenario emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.
It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this for the direction of the housing market.
“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”
BOTTOM LINE
If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about the direction of the housing market and what it means for you when you buy or sell this year.
