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Home sales drop 38% Y/Y in December, but 'demand hasn't gone away': Re/Max

Full length of saleswoman greeting female customers while standing outside house

The Good Brigade

In stark contrast to 2021's frenzied seller's market, the housing market in 2022 waned in favor of homebuyers, with home sales for December off 38% from a year before and the number of homes for sale up 69% across 53

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Reading61 profile picture
Fun they always talk their book. Every place I look its down 100-300.
@Reading61 ...in your market.
Reading61 profile picture
@camkeego Yes Orange County and Colorado Springs. I own one home in the OC(HB) and three in CS. Why? Just sold one in CS about 75-100 down from the high. Still made a boat load (I bought all of my homes before 2010) of money from when I bought it but it's coming down quick.
OverTheHorizon profile picture
Demand will have to wait. Housing cycles 3-5 years not 3-5 months.
JonJJ profile picture
@OverTheHorizon copy paste some of article
OverTheHorizon profile picture
“Beazer Homes USA slows construction 50%, executives see further decline.”
@OverTheHorizon One counter to that article is that the price points for these new homes are on average historically high. All of the new homes in my area are all over 2,500 sf and are definitely not 'starter' or 'first' homes. The demand for more moderately priced homes is absolutely huge.
Buyers will always be there, but at prices they dictate. Not artificially inflated prices that sellers still hope they can get, when "pivot" happens (which will not). He Who Panics First, Panics Best
@Nissanfan Demand determines prices... not sellers. Prices are not "inflated" in places where people want to live. Look at Los Angeles and Phoenix... people coming in droves still, interest rates spike, and sellers take their home off the market which lowers supply. The demand will keep prices pretty elevated as long as people want to keep moving there.
@Nissanfan sadly, the markets rarely dictate the price. I've seen these two situations in the past week. 1. House under contract for $195,000, was listed for $200,000. Appraises for $162,000. 2. House on the market for $755,000, under contract for $750,000. Appraised for $820,000.

I have seen many situations where a home had multiple offers in excess of $400,000, house appraised for $380,000.

Banks determine the value/risk, and their appraisers justify it.
"Also, the median home price of $385K ticked up 1.3% from the year-ago period, though dipped 2.3% vs. November 2022."

Largely as anticipated, the decline in price hasn't been as significant as many called for because of inflationary pressures including from rising wages.
@kmi Canada had a record decline last month, most on record. I suspect there are forces, predominantly the liquidity that the average person had, that have kicked the can slightly longer down the road for us.

Inevitably, we should see home prices follow demand for mortgages, which fell off at a rate that has never been seen before. Not saying home prices will fall off at a rate we've never seen before, but it's certainly possible as long as inflation stays high and rates stay high. Why? Because the longer that kicks down the road, the more people you will have that start to room up, and the more secondary home sales you'll have, and the investor share of the SFR market (20%) which is x4 the historical norm will start to decline as people don't pay their rents and people realize you don't get rich off owning 3 investment properties that are leveraged.

Then you have the multi family bubble where there is a massive supply of apartments out there.

There are so many trends that have been working 100% in the favor of housing, that if they start to shift, which inevitably they have to, all of them, at some point in the future, then you will see weakness in housing. The obsession that people have for owning a house will also dissipate.

Not to mention that home ownership is at an time high if you exclude the GFC peak.

Could write for hours/days/months/years/decades/lifetimes on the trends that are working against housing going forward.

Only caveat is if the FED wants to go full on BOJ, which doesn't make sense in reality because the problems are different and the demographics are different.

I anticipate this will be less "housing crisis" of a decade ago and more of a long drawn out process as weak GDP and high inflation persist.

I think a lot of people who struggled through the '08-'11 Housing Crisis/Great Recession think that is the baseline and are looking for a repeat. That's not what we have here.

I generally encounter weakness in the economy before it filters into the 'reported data' because vacancy jumps in my primary business. That's not happening AT ALL right now. Zero vacancy and I got more applicants than I can shake a stick at and rents have not declined, in fact I'm increasing as much as I can to deal with inflation.

Granted, I'm in the hot zone for illegal immigration (greater NYC area), the massive numbers of which are creating inordinate pressure on the market, but it's making investment property lucrative and sustaining price on sales.

I hear you on the headwinds part and I agree that some air has to come out, but it won't come out till the economy and all the welfare inflating it is popped. That hasn't happened. Even when it does, I reiterate it's highly unlikely anything like the Housing Crisis of a decade ago recurs.
@kmi Will it be the same as the housing crisis? nothing is ever the same. Will it have similarities? yes.

Is it possible it doesn't happen and we just kick the can down the road yet again only making the inevitable issue worse? Yes.

Recessions are meant to happen, when we don't let them happen, they get worse.

Issue with housing was record low interest rates at a time where it wasn't needed or warranted, mixed with a combo of massive handouts like we've never seen before; people had far more money than they've ever had before.

As those two items ultimately get removed, and they won't be replaced, we're now on the downward trajectory for housing; and you're right -- it won't be fast, it will be slow and extremely painful because it is so slow. Housing prices don't ever go down alot in one month, it takes time for them to go down as buyers get exhausted and sellers get scared. The last point -- sellers get scared, we haven't even seen that in the least bit and prices have dropped. When we start to see sellers get scared, is when we will really see home prices drop. Probably 10-40% depending on the geographical area. NYC and northeast never really drops much because it never really goes up much; but your hot bed places and California I'd suspect see something that they haven't seen before, possibly worse than the GFC.
Hilarious realtor pump.

Imagine Apple coming out and saying iPhone sales were down 38% y/y, then having the nerve to say, but wait everyone!! Demand is still as strong as ever!!
@DrewMcVay dumb ass, population growth. Prices are down but demand is up. Its actually true
@Chefboy6969 right because sales 38% less and supply up 69% signifies anything other than less demand lol.

Must be weird to live in a world where 2-1=8
@DrewMcVay Um... listings are down. That's what rising interest rates have a tendency to do. They encourage people NOT to list their home because they aren't going to get the best value for their home.

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