When will the real estate market return to normal?
Hey everyone, thank you for joining us on our weekly real estate drill down. Hope you had a fantastic Thanksgiving break. We had an awesome greatest giving of trees event. Gave away 60 trees to local families, single moms, dads, veterans and alike had a lot of fun.
So my name is Cristi McGowan with NextHome Our Town, and there’s a lot of talk about if inventory will ever loosen up, if we’ll get back to normal, lots of comments over the Thanksgiving dinner table, I’m sure about foreclosures and how pricing is just out of control. So today we’re going to talk about why we expect inventory to increase this winter, and what that means for the overall market.
In a Normal Market
So in a normal year, historically speaking, most of our annual housing inventory hits the market in the spring, the second quarter of the year, that’s April, May, and June, we see a ramp up typically in March here in Waco. But you know, this market is anything but normal, right. And so what we’re expecting based on recent behaviors in surveys is that the spring market will be accelerated. And we will see tons of listings hit the market this winter. So we’re going to talk about why we believe there’s tons of people that are finally embracing the changes and the opportunities as a result of the pandemic. And deciding that now is the best time to sell. So we’ll look at this next slide.
NAR published a report recently where Jessica Lautz their Vice President of Demographics and Behavioral Insights, she says home sellers have historically moved when something in their lives changed such as a new baby, they got married, then they got divorced. Maybe they change jobs, and the pandemic has impacted everyone. And for many, this became an impetus to sell and making housing trade.
Do people just love Dr. Pepper?
So we’ve been answering questions about why so many people are coming in from different states to Waco, why exactly are what exactly are they doing for work? Why are they choosing Waco? I mean, are they just in love with Dr. Pepper, I don’t know. But there’s no doubt as Jessica states, that pandemic caused us to realize new reasons to move and open up the entire country as an option. It’s safe to say that in addition to some life events, that pandemic caused people to dream about other lifestyles, where some may have always thought that living in a condo in downtown LA was the perfect place for them forever. Maybe now they’re thinking about putting a little space in between themselves and the neighbors, of course, as a result of the pandemic.
The average tenure of a home owner
So let’s continue with this with this thought in the same report where Jessica points out different reasons for moving this quote was also drawn. The pandemic likely spurred occupants to shorten their homestay, as average tenure in the home decreased to eight years from tin. This is the largest single year change in home 10 years since NAR began collecting such data. Traditionally, people stayed in their homes for five to seven years. You know, that’s what we were always taught here. So let’s look at this graphically. Here we go. You can see from 1985 to 2008, the average tenure was six years. And that’s what we all kind of expect and, and go off off especially as real estate agents that you know, the average day know how people move every five to seven years. But post housing crash for various reasons. The tenure changed significantly, upwards of 10 years on average, people just stayed put, a lot of people couldn’t even sell they they didn’t have the equity or the means to be able to move at all. So they were kind of stuck. But it’s clear here that there’s a major shift happening looking at 2021. The stat dropped to eight years on average. And with the recent rise in demand, causing prices to skyrocket, people now have tons of equity to access making a move more than possible.
A Perfect Storm is Brewing
So we have this perfect storm brewing. People have been stuck in their homes for about 10 years. The pandemic causes us to change our our thoughts and our needs. So let’s consider this next quote by George Ratiu. George here is the Manager of Economic Research for a Realtor.com and he says the pandemic has delayed plans for many Americans and homeowners looking to move on to the next stage of their life are no exception. recent survey data suggest the majority prospective sellers are actually preparing to enter the market this winter, which is a very interesting.
Why People are Moving
So at the same report, the majority of sellers plan to list their homes it says within the next six months, 65% of them having just listed are planning to list immediately 93% have already taken steps to activate their listing contacting an agent and 36% are seriously researching the process of selling, looking in their their value of their home. So inside of that same report, they indicated the reasons for selling 33% realized they wanted a different home going forward post pandemic 37% state their home no longer meets their needs. 32% want to be closer to friends and family 23% desperately need a home office. So people are making decisions after a year of chaos to make some changes. And the reasons why they had to stay where they were are no longer holding them hostage.
Inventory is Coming
And so here is what’s happening with the active listing counts, we can see here historically, the trends represented by 2718 and 2019, the number of active listings were pretty predictable. You know, I don’t know if you watch that episode I did a month or so ago on the best time of the year to list your home. So this data pretty much shows you that the majority of sales are in the springtime, April or the second quarter of the year. But in 2020, as a pandemic raged, people went into lockdown. And you can see the inventory level pretty much tank at about may, you know when we march, it really started to get bad, right. So this is where this massive price appreciation came from when there was a significant amount of people living in those condos wanting to ditch the city life and move out of town get a little space, but there weren’t any homes available. So demand was created by the lack of inventory. And therefore supply demand, we had significant price increases.
But now we’re wondering where the rest of 2021 is headed. And as people have equity and cash to move now because pricing was so good. Demand is still good. Interest rates are still historically low. And these people have made decisions on finally where their new life will be lived. behaviors and surveys are showing people actively getting ready to list their homes. And I’m just wondering, what do you think? What are what are you up to? Do you think we’ll be somewhere between the 2020 the 2019 trim come December? Are we going to see a swing up of inventory level? You know, there’s not one market out there that has enough listings for the number of buyers. And let’s look at the most recent data. Daniel Hale chief economic economist @realtor.com says on a positive note new listings this week are higher than we saw at this time one year ago. She said this in the last week. In this was the highest uptick in eight weeks, she said so we’re starting to see this prediction pan out. We’re on a roll here and I’m just wondering, are you ready to make a move? I want you to message us we’ll send you our free listing guide along with a recent market price estimate for your home. And as always, we are more than happy to answer any of the questions you have. We have professional stagers cleaners, organizers, packing packers, handyman, painters, all of these people on hand ready to help make your transition smooth and profitable. Thanks so much for watching me today. Call NextHome If you have any questions. We are ready to help you! Have a great week.