I want to give you a status report on the state of the real estate market as of August 2022. We’ll look at some articles about listings, some data and trends, and what social media influencers and economists are saying about the housing market.
Let’s go.
According to Redfin, “New listings are down 12% from a year ago as sellers respond to waning homebuyer demand. Still, overall housing supply is on the rise—a sign that buyers are pulling back more than sellers.”
It sounds scary, but remember, the media is all about writing what gets you to click on their article. You can read the whole article on Redfin’s site to see the full details, but here are some stats and leading indicators (of homebuying activity) from the Redfin article:
(Source: Redfin)
You see a lot of people on YouTube who see “new listings are down” and eventually conclude that there is a housing crash, and they proceed to gather evidence that “supports” this claim.
A YouTube channel called Real Estate Mindset released a video about Redfin’s article, and he says, “Here’s the other cool thing: Despite new listings being down 12%, inventory continues to surge month after month after month. And the reason that is, guys, is demand has been completely destroyed.”
Another YouTuber, Reventure Consulting, used several stats and pieced them together in a way that supports his claim that “As I said in the beginning, this housing crash in San Jose and the other cities I’m going to talk about on this video, is happening very, very fast. You can see that, if we go back to the last housing crash in San Jose in ’07, it started with smaller value declines: around 1% or 2%. We’re going all the way to over 4% or 5% per month, which is a huge deal everyone…”
Pay attention to the verbiage they are using, because a lot of people are using scare tactics to freak people out, (1) to get views and clicks, and (2) to sell people stuff, like coaching or books, etc.
That is why I constantly urge you to pay attention to the data and be careful about filtering the things you hear or read online.
When you start looking at the real data and the numbers, you realize that the demand is actually still there, and what we’re heading towards, if anything, is a neutral market. This is according to the numbers, the economists, and people like me, who study this on a daily basis and live it. In comparison to the people who just kind of look into it and they’re employing scare tactics then sell you their coaching class.
So, let’s take a look at the rest of the data that Redfin presented in their article. These stats are based on homes listed or sold during the four-week period that ends on August 7th:
A lot of people are generalizing it too, but remember, real estate is VERY regional. Looking at the real numbers helps you see a better, more objective view of the whole picture. A lot of people are panicking for no reason because they’re getting news that just doesn’t make sense—they’re getting clickbait. That’s what’s happening. And I don’t want you to fall for that.
We’re just getting into a more normal/neutral market, where there are more balanced buyers and sellers.
In Los Angeles, California (July 2022—updated since the video on August 15th), the median price was $1.2 million, home sales were at 953, and active listings were at 2,634, according to CAR (California Association of Realtors). The median DOM (days on market) is 13 days. Sales-to List price is 101.2%, and 31.8% of active listings have reduced prices.
These stats won’t be shown by those people who are trying to freak you out.
According to Fortune, home prices are falling, and homebuilders have an oversupply. However, this is what they say: “But don't pencil in a 2008-style housing crash. This time around, homeowners are less debt burdened, and subprime mortgages are less of an issue. That said, had supply-chain constraints not held back homebuilders, it might have been a different situation.”
In a crashing housing market, you’ll see significantly high days on the market because people don’t want to buy, or they can’t afford to buy, but look at the stats in California according to CAR:
And it looks similar in a lot of states across the US.
So, do me a favor. When you see these people saying that the housing market is crashing, tell them that they are not reading the data correctly. We real estate agents live this on a daily basis, and I get to talk to the most agents out of any other agent because I have the largest community of real estate agents in the world, all in one place. We get to talk about the updates in their areas and compare stories.
Right now, we don’t know where the market is heading, but I can tell you that there is no crash. Not in the next month or two.
Pay attention to the data and don’t let other people freak you out, because if we let fear get into the decisions that we make, we end up making stupid decisions. Be careful about who you listen to and how you read the data.
