Inventory Is Up and Sales Are Down, but Are We Really in a Housing Recession?
Have you been hearing a lot about a housing recession? Are you concerned that housing prices will plummet? Or, that interest rates will skyrocket even further? With all the media hype and prognosticators out there, it’s hard to hear through the noise and to really know where the housing market stands.
Recently, Matthew Gardner, Chief Economist with Windermere Real Estate, shared his insights about the housing market. According to Gardner, we are not in a housing recession. Gardner gave a lot of information to support his conclusion and following are a few of his reasons that might lead you to conclude that he is right:
- The number of homes for sale in July of this year was almost exactly the same as we saw last July and is still well below the levels seen in 2018, 2019 or 2020.
- Listings peaked at almost 3.9 million units in 2006; but today there are 2.6 million fewer units on the market than we saw back then.
- Sales so far this year are lower than we saw during the first seven months of 2021, but they are at about the same level as we saw in 2018 and are actually higher than in 2019 or 2020.
- Inventory has risen, but it is still relatively low. With builders slowing construction activity to a crawl, it’s unlikely that housing supply will grow much organically.
- We will actually see a lot more potential buyers as Millennials and Generation X mature. Buyer demand will increase.
- Mortgage rates have doubled from 2021 lows, but many economists find it unlikely that rates will continue to rise significantly. In fact, some see rates pulling back, albeit modestly, in 2023.
- Foreclosure filings have certainly risen, but they are still remarkably low compared to historic standards. Plus, a large percentage of homeowner’s have good equity in their homes.
- In 2021 over 6 million home buyers got mortgages with rates averaging below 3 percent. Sellers may decide not to sell as they would lose their current mortgage rate, equating to less inventory.
All real estate is local and no one can predict where we are headed. Clearly, we will see variations within different markets across the country, and a lot can still happen. But, if Gardner is correct, “We are in a ‘housing reversion,’ not a ‘housing recession.'” Only time will tell, but historically, housing is a great hedge against inflation. And, a pretty safe bet. Especially.In.Hawaii.
For more information, listen to the full video: