We all know that real estate is local. The nuances of adjacent neighborhoods, styles of housing in price ranges can have a big impact on particular submarkets. I spend a lot of time thinking about that and comparing different areas looking for those shades of distinction. It’s also important to keep an eye on what’s going on at the macro level too. I subscribe to a couple of publications that provide data on a national level about what’s happening in the real estate market so I thought I’d share a few things with you today.
This graph is provided by the company that supplies the software that many agents around the country use for making showing appointments. It’s the one that we use here locally as well.
It doesn’t absolutely track every single showing in every single market but it has enough market share that it provides us a good baseline. You can see the dramatic drop when the shut down started happening around the country and then as things loosened up, activity has come back.
That’s certainly been true in our area. There are still restrictions about open houses and overlapping showings are not allowed. The past couple of weekends, when I have taken buyers out, the Showingtime calendar has been nearly full for many newly listed properties on both Saturdays and Sundays.
This chart shows both the seasonal ebb and flow that is part of the normal real estate cycle year-to-year, and the absolute numerical difference in total number of listings over the past 3 years. 2020 started off the year at the lowest point in the past 3 years and was either flat or headed in a downward direction steadily ever since. So inventory is tight, very tight.
Just to give you a little local perspective here is the trend line for active inventory in the DC metro area for the past 3 years you can see that the peaks of inventory got lower and lower each year. There’s very little out there for buyers right now.
That dovetails into the next slide which shows the affordability trend over the past few years for housing. Even though prices have moved up steadily in many markets, the substantial drop in interest rates have caused the actual monthly housing expenses as a percentage of household income to historic low points right now. This affordability factor has driven very strong demand at the same time that supply has been diminished. We all know what that means.
One more slide and I’ll stop, I promise 🙂
Many people look at what’s happening in the housing market today and the economy in general and they ask the question about how this will compare with the Great Recession. There are a lot of big differences between the two. I could write pages on that subject alone but today I’ll focus on one thing, the equity position of many homeowners. the last run up in prices in the early 2000s was largely fueled by lax lending standards and there were many homeowners who had little or no equity in their properties when the market went south. This slide shows the number of people who are in forbearance and what their Equity positions are. as you can see the large majority, 77% of them, have 20% equity or more. This is a very different position then many of the homeowners were in 2008 and 2009. Most homeowners today could still sell their homes at present prices and walk away with money.
Of course no one can predict the future, well maybe she can 🙂 We’ll all have to wait and see how things play out. But I think there’s some reassurance to be had in this information. If you’ve got any questions, or would like to see some more geeky slides, please feel free to reach out!