5 Reasons Today's Housing Market Is Anything But Normal
There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning. Here are five housing industry metrics that prove we’re nowhere near normal.
- Mortgage Rates - If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
- Home Price Appreciation - According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%. According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.
- Months’ Supply of Inventory (Homes for Sale) - As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.
- Days It Takes To Sell a Home - The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.
- Number of Offers per Listing - According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.
- The bottom line is when mortgage rates are near historic lows, the price appreciation is at historic highs and housing inventory is less than half of the normal amount. The time it takes to sell a home is cut in half, and there are twice as many offers on each house. However, it’s hard to say we’re in a normal market.
*Courtesy of www.myckm.com