While there are many headlines out there that claim we’re reverting to a more normal real estate market, that is not happening. False claims like such would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019 and that is far from the truth. The market is still extremely vibrant as demand continues to strengthen even while the housing supply is slowly returning. The Merriam-Webster Dictionary defines normal as, “conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine“. Keeping this definition in mind, look at the five housing industry metrics below that prove we’re not even close to normal.
- Mortgage Rates– Looking back at the 30-year mortgage rate, we can compare the 8.86% rate in the 1970s vs. today’s rate coming in at 2.87%, which is very close to the historic low.
- Home Price Appreciation– The average annual appreciation on residential real estate prices since 1995 has been 4.14% & the latest data estimates home price appreciation will hit 14.1% this year.
- Months’ Supply of Inventory (Homes for Sale)– 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, this number has hovered around 6 months. Currently, the months’ supply of inventory is 2.6. This number is less than half of a normal supply.
- Days It Takes To Sell a Home– Prior to the pandemic, in 2019, the average number of days on market was 35. Today, that number is cut in half and is now coming in at 17 days.
- Number of Offers Per Listing– In 2019, the number of offers per listing was 2.2. Today, that number is double at 4.5.
When mortgage rates are 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 house is cut in half, and there are twice as many offers on each house… It’s hard to say the current market we’re in is normal.