There are several stories going around suggesting that we’re returning to a more typical real estate market. That would suggest that the housing market is resuming its pre-pandemic trajectory, which it did from 2015 through 2019. But this isn’t the case. Even while housing supply is gradually increasing, demand remains strong, indicating that the market is still
The definition of normal from the Merriam-Webster Dictionary is as follows:
“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”
Here are five housing industry statistics that illustrate we’re still quite far from normal using this definition.
1. Mortgage Rates
The 30-year mortgage rate tracked by Freddie Mac shows the typical rates over time:
1970s: 8.86%
1980s: 12.7%
1990s: 8.12%
2000s: 6.29%
2010s: 4.09%
The monthly mortgage rate today is about 2.87 percent, which is near to but not quite yet at the historical low.
Mortgage rates are currently anything but normal, typical, or routine.
2. Home Price Appreciation
According to Black Knight, the average appreciation in residential real estate prices since 1995 has been 4.14%.
According to the most recent projection from the National Association of Realtors (NAR), house price rises will reach 14.1% this year, which will be greater than any year since Black Knight began recording data.
Today’s home price appreciation is anything but typical, usual, or normal.
3. Months’ Supply of Inventory (Homes for Sale)
According to NAR:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”
As of the most recent Existing Homes Sales Report from NAR, the available inventory level currently stands at 2.6. That’s significantly lower than normal.
The supply of houses for sale at the moment is anything but typical, usual, or reassuring.
4. Days It Takes To Sell a Home
The days-on-market indicator reflects how active a market is and how quickly properties are selling. Prior to the epidemic, the average number of days on market was 35, according to NAR. Today’s number has been reduced by half, now standing at 17 days.
Currently, the days-on-market metric is anything but usual, typical, or routine.
5. Number of Offers per Listing
The number of offers on a property has doubled in the past few years, according to NAR. According to NAR, there were 2.2 offers per listing in 2019. Today’s figure is twice as high at 4.5.
Currently, the number of offers per listing is anything but usual, typical, or routine.
In the End
When…
Mortgage rates are at or near historic lows.
Price appreciation is at historic highs
Housing inventory is less than half of the normal amount
The time it takes to sell a home is cut in half, and
On each home, there are twice as many offers
.…it’s hard to say we’re in a normal market.