Is The Sky Falling?
Adam Smith, some 233 years ago, nailed it with the concept of supply and demand. Unfortunately, he is not here now to experience “clickbait!” If you are reading a headline like “Home Prices Are Falling,” be skeptical.
Why? In general – in most markets – it’s just not the case. Across the US, home prices are up 2.4% to a median of $425,000 compared to last year. Are there exceptions – yes, in a few segments in a few markets – reach out to me for details, or use my Altos link to look at your specific market.
Despite significant mortgage rate increases and affordability challenges, a resilient economy combined with demographic forces of demand, there simply are not enough homes for the number of qualified buyers.
Demand did drop in 2023, yet so did supply. And Adam Smith nailed it – supply and demand forces worked. To place this in perspective, at this time in 2019, there were 822,000 homes for sale nationally: today? 546,000.
Just like Wall Street, consumers love stability and predictability. As mortgage rates stabilize and normalize, we are seeing slightly more immediate sales vs. last year. This is a leading indicator that 2024 will be stronger than 2023 from a sales perspective.
Other leading indicators? For newly homes listed, Altos is reporting a few percentage points higher on the initial list price vs. the same time a year ago, and immediate sales of those homes are slightly ahead of last year.
Price cuts? Trended over time, we see about 33%; nationally, we are at 38%, so a few percentage points higher – more than normal. I suspect these relate more to affordability than other factors.
The team over at Altos reports and updates every Monday – it’s a leading indicator – much earlier than traditional channels. I’m a fan. Win The Day!
