Some talking heads and so called experts are suggesting that we’re returning to a more “normal” real estate market. They claim that we’re going back to pre-pandemic days.
But that’s just not happening. The market is still extremely vibrant as demand remains strong and housing supply is slowly returning.
The dictionary definition of normal is “usual, typical or routine.” So, using this definition, here are five housing industry metrics that prove we’re nowhere near normal.
1. Mortgage Rates
If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:
- 1970s: 8.86%
- 1980s: 12.7%
- 1990s: 8.12%
- 2000s: 6.29%
- 2010s: 4.09%
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low. But, they are predicted to slowly rise.
2. 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 nationally will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.
On Cape Cod, the median sales price for a single family home through July is up 30.4% over last year.
3. Months’ Supply of Inventory (Homes for Sale)
According to the National Association of Realtors (NAR): a “six months supply (of homes) is associated with moderate price appreciation.”
As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory nationally stands at 2.6. That’s less than half of a normal supply.
On Cape, the supply of available single family homes for sale is smaller. That figure stood at 1.3 months through July. A year ago, it was 3.2.
4. 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 national average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.
Cumulative days on market before sale on Cape is a little higher at 22.
5. Number of Offers per Listing
According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number nationally is double at 4.5.
There are no cumulative statistics available locally for the number of offers per listing. But we can tell you anecdotally based on our own experience and what we hear from colleagues that the days of 10 or more offers seem to have passed. In general, a “hot” property is now receiving maybe five offers.
So what does this mean for buyers and sellers?
If you have been sitting on the sidelines waiting for home prices to drop, you’re costing yourself money. Mortgage rates are predicted to rise and home prices are expected to remain at least steady.
If you have finally decided to sell, don’t expect the buyer frenzy and head scratching offers your neighbor received just a few months ago. While list price remains the starting point — the days of hoping to get close to asking are long gone — buyers seem less willing to break their bank to buy a property. But given the equity most homeowners have, a successful sale will still result in a very nice return on investment.
Curious about your options? Let’s connect at 508-568-8191 or email@example.com. We’re happy to help.
Happy Labor Day!
Mari and Hank