ASK THE ATTORNEY: Is The Market Crashing or Correcting?

If you’ve been following the news lately, you have heard a lot about current housing market conditions. The main questions I get these days revolve around whether the market is crashing or correcting? Here's what you need to know.

The housing market is changing compared to the last two years. However, what we need to remember is that the past two years were record-breaking in nearly every way. We had record-low mortgage rates and we had millennials reaching peak homebuying years, which significantly increased buyer demand. At the same time, there weren't enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.

This combination led to record-high demand and record-low supply, and that wasn't going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. 

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It's a good indication of buyer demand. 

The 2019 statistics provide a good baseline of demand before the pandemic. And while current buyer demand recently began to moderate slightly based on the latest data, recent showings are still above 2019 levels.

Now, since 2019 was such a strong year for the housing market, this helps show that the market isn't crashing – it's simply at a turning point that's moving back toward more pre-pandemic levels.

Let’s talk about Existing Home Sales Then and Now

You may be reading headlines about how existing home sales are declining, but once again, perspective matters. 

The pandemic numbers beat the more typical year of 2019 home sales. And according to the latest projections for 2022, the market is on pace to close out this year with more home sales than 2019 as well.

It's important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. 

So what we have is today's housing market looking a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.

Bottom Line

If recent headlines are generating any concerns, look at a more typical year like 2019 for perspective. What we’re experiencing now is not a crash or correction. It's just a turning point toward more typical, pre-pandemic levels. 

Let's connect if you have any questions about our local market and what it means for you when you buy or sell this year.