What Happened To The Real Estate Market?

Market data as of July 2023. For the latest numbers in your area, see my live Altos Research market report.

It’s that time of the month: the real estate market update. Out of 84 slides in this month’s Keeping Current Matters update, plus one from Altos Research, here are the three I’d share, with a link to the full deck.

Why it matters: if you want to attract more people to your brokerage, team or office, help them understand what the data means and how to act on it.

Key Updates for July 2023

Supply is still the story. 247 years after Adam Smith, the laws of supply and demand are still working: 99% of US markets saw a decrease in resale inventory. See the last 7 and 90 days for Washington, D.C. and San Francisco, or type in your own market.

No relief in sight:

Large institutional investors see no reason to sell. Residential is delivering a higher return than commercial. Follow the money.
Homeowners won’t trade a 3% mortgage for a 6% one. They’re remodeling instead.
New construction is growing, especially in the South, but not nearly enough to close the gap.
A Freddie Mac survey found 18% of consumers want to buy in the next six months, and 16% want to sell.

Consumers are in strong financial shape. Affordability is always an issue, but the average credit score is 714, the highest in 23 years, and the median for mortgage applicants is 765.

More data, not more knowledge. You are the knowledge broker for your local market. After talking with a knowledgeable, hyper-local agent, 64.5% of homeowners were more likely to sell. Value-added conversations make the difference. No secret agents!

Where it’s moving. Several of the top 20 markets for listings sold are in Texas: Houston, San Antonio, Austin and Dallas-Fort Worth. Some of the tightest pricing is in California, where fewer than 12% of listings took a price cut in cities like La Mirada, Cypress, Fremont, Placentia and Garden Grove, versus 32% nationally.

Key Takeaways

Value-added information creates listing opportunities with homeowners and investors, especially non-owner-occupied properties and 1031 exchanges.
16% of homeowners want to sell in the next six months. That’s your opportunity.
Sales and rates are normalizing, and prices are growing faster than expected.
Builders are adding supply, but years of underbuilding mean the imbalance will last.
Seasonality has returned, and prices are rebounding.

Confidence is contagious, and so is a lack of confidence. There’s plenty of actionable data to be confident about.

A Note on Recruiting

Recruiting and retention have never mattered more. In every kind of market, about 10% of agents leave the industry each year and 10% to 15% join. Even with an 85% satisfaction rate with their broker, 32% switch firms.

Resources: Full slides · National trend (with your own city or ZIP)