The temperatures are rising, the sun is setting later, and the daffodils are starting to peek their green leaves out of the earth – spring is coming. And like bears that are starting to wake up from their long winter nap, homebuyers and sellers are coming out of hibernation… or at least they normally do.
Thank you for reading this post, don't forget to subscribe!Nationwide, the first week of pre-pandemic February typically marks the lowest point for housing inventories during the year, as sellers return to the market in time for spring, but this predicted trend has been out the window since the start of the pandemic. has been thrown.
“The pandemic definitely changed the real estate market,” Todd Alperin, a Better Homes and Gardens Real Estate The Masiello Group said the agent based in southern New Hampshire. “Coming into the pandemic we had a low inventory environment, and the pandemic intensified the inventory shortage, and that has created really major issues for the real estate market.”
According to Mike Simonsen, president of Altos ResearchIt is quite unusual to see a decline in housing inventory throughout February, as has happened this year.
“Prior to the COVID-19 pandemic, it was normal for inventory to increase in February as spring home sellers began listing their homes and buyers had not yet applied,” Simonsen said in his February 13 Housing Wrote in Market Update. “But in 2020 through 2022, buyers moved out quickly after the new year and inventory didn’t bottom out until much later in the spring.”
Housing inventories have been falling nationally since late October, after hitting a two-year high of 577,172 homes on the market for a 7-day average, according to Altos. As of February 24, 2023, the 7-day average for inventory stood at 429,757 and close observers do not expect much change in the coming weeks.
“Inventories are falling very quickly now, which is actually a surprise,” Simonsen said. “My expectation is that if rates stay high in the six or seven for a few years, then during that time, we’ll get a little bit more inventory each year and we’ll get back to normal.”
housing wireLogan Mohtashmi, Principal Analyst, said: “Inventory has been slowly getting lower and lower for about 10 years as people get a home with a fixed-rate mortgage and their income generally goes up over time, But their shelter costs stay the same, so it turns out to be a really good deal for them. Inventory is higher than last year, but we’re dealing with an all-time low. The way inventory will go up is that If mortgage rates stay high for long enough and homes take longer to sell.
What happened to ‘normal’?
At the end of 2022, as buyers grapple with mortgage rates doubling in a matter of months and sellers adjust to the shifting market, many agents think the market is on the verge of a return to “normal.”
“My team and I are seeing more ‘normal activity’ in the market,” said Kent Redding, an Austin, Texas-based Berkshire Hathaway Home Services agent, told actual trend in November.
While Redding says market conditions remain well below the frantic pace of the early 2021 and 2022 housing market, he said he has No It turned out to be the normal he was hoping for.
“We are seeing some modest growth, but the pressure is still there for buyers,” Redding said. “Personally, in my business, I am busy getting sellers ready to go to market in March and April and it is easier because sellers are beginning to understand that what we had before was abnormal and now things are more normal. The trends are starting to resemble price increases and days on the market.
Redding noted that while he expects inventory to pick up in March and April, he expects there to be about 8,500 homes on the market, still down from an October 2022 peak of about 10,000 homes.
In southern New Hampshire, Alperin is expecting a similar trend.
“I don’t think we’re going to see a huge jump in inventory anytime soon, but I do think we’ll see some additional homes come on the market over the next few weeks, as they typically do in the spring,” Alperin he said.
Alperin said the timing of the housing inventory boom looks like it’s following normal pre-pandemic seasonal trends. But so far, the size of the uptake is nowhere near what it normally is, a trend he expects to continue through the rest of the year.
“I don’t see a big push of inventory into the market because many potential sellers are having second thoughts about selling,” Alperin said. “Many people moved and refinanced when mortgage rates were in the 2%-3% range and didn’t want to lose that lower interest rate by moving to another property. And then the low inventory is putting other sellers on edge because they’re nervous about where they’re going to go if they sell.
In addition to the generally timely arrival of the spring sales season, Alperin said other aspects of the southern New Hampshire housing market have also returned to more normalcy, including home price increases and fewer bidding wars.
“It depends on the community and the price range, but we are not seeing things dramatic when there is a bidding war,” he said. “It’s probably more than $10,000 or $15,000.”
But Megan Fox, a compass The agent, based in Bergen County, New Jersey, said that’s not the case in his market at all.
“We are still seeing multiple offers and open houses are canceled all the time because we are getting multiple offers in the first few days,” Fox said. “I almost feel like we have an even bigger situation on our hands right now than in 2021 and the beginning of 2022 because there is no inventory and we still have a lot of buyers relative to the amount of inventory in our area. Everyone is fighting for the same handful of houses.”
Earlier in February, Fox said a home went on the market in her metro area and received 18 offers within days of the listing and ended up asking for $150,000.
Fox said, “You’re still looking at really big jumps above the asking price”.
Her experience is backed by data. In January, 41% of resale listings in the Northeast received multiple bids John Burns Real Estate Consulting,
According to data from Altos Research, the 90-day median median list price in Bergen County is on the rise since the beginning of February 2022, rising from $639,000 to $799,000 by February 24, 2023. Meanwhile, there has been a steady decline in inventory since September 2022. From a 90 day average of 1414 homes on the market to 777 homes on the market by February 24, 2023.
Despite the challenging conditions, Fox is optimistic that things will be at least marginally better when March and April arrive.
“The pre-pandemic spring market was our biggest market and this year I definitely think we are going to see a stronger spring market,” she said. “I see that some people are preparing to put their homes on the market right now and we are really encouraging all of our potential sellers that now is still a great time to list.”
In Miami, Mike Martierna, a local Compass agent, is also dealing with much less inventory, but he hasn’t seen bidding wars since the height of the market in 2021 and early 2022, especially for properties like Fox described. .
“The prices are quite stable. “They’re down maybe a percent or two from the height, but I expect them to be pretty stable this year.”
How can we get back to ‘normal’?
While not all metros are facing large-scale bidding wars pushing up home prices even more, home prices are still high and the lack of supply is hurting agents.
“The inventory is really holding the market back from returning to pre-pandemic normal,” Fox said.
With a slower than expected deflation rate, some agents are concerned that this could potentially lead to more aggressive action. federal ReserveBut Mohtashmi thinks the Fed should take a different course of action.
“The Fed talked about a housing reset, but you can’t run monetary policy based only on house prices,” Mohtashmi said. “The Federal Reserve said they wanted to get rates at a certain level and just let it hold and they should just hold on to that because if the economy starts to weaken, bond yields will go past them. I think the Federal Reserve Just wants to hike some more rates and just wait and see what happens. They shouldn’t be scared of any positive or negative moves, they should just hold their ground and see when the labor market breaks . But the Fed rate hike story is coming to an end.”
Back in southern New Hampshire, Alperin is keeping a close eye on the Fed and their interest rate plans.
“The Fed has been extremely aggressive in raising interest rates,” Alperin said. “We are now looking at interest rates that have basically doubled in less than 12 months, but we don’t have the supply of homes back. Something needs to change.
