The “Unprecedented” Market

News in Real Estate

Quick TLDR:

Signed contracts for homes for sale dropped in April 16%, and down 26% from last year.

Showings on homes dropped from averaging 26.1 showings the first weekend (February), to 5.1 (May)

Mortgage applications went down 12% this week, and down 15% for the year. 

Rates for Friday, May 27, 2022 were at 5.375%

If you’ve seen the news lately, read a newspaper article, browsed anything online, you’ve probably seen just how quickly and wildly the real estate market can change. The word I’m hearing most often to describe it, would be “unprecedented.” That is seemingly the buzz word for the housing market this year. Two years ago, when we were just entering what we all thought would be a short-lived Covid virus, the market began to shift with the ever evolving health restrictions. We were limited on open houses, home showings, and the market began to show signs of fear and uncertainty from consumers. There were less and less homes on the market, given the fear of economic recession. To balance that out, mortgage rates significantly dropped, into “unprecedented” territory, leaving people able to afford more home, which then drove prices up. We saw prices skyrocket, some even doubling, but because of the drop in availability, people began to pay even more, further inflating the market. 

Now where are we? As inventory begins to increase, along with mortgage rates, people have begun to speculate whether or not we are in a housing bubble (I still maintain that we are not, and have written about it further here: https://www.rachelharveyhomes.com/blog/the-bubbles-gotta-burst-right ). However, I do not believe that prices will continue to rise at the historical pace they did the last two years. With mortgage rates rising from the 2%s to 5%s, people seem to be slowing down from the FOMO (fear of missing out) pace last year. Mortgage applications and refinancing applications are down significantly from last year. That has not slowed down the Denver market too much, as the average price in the 80238 neighborhood stands at roughly 711k. But many people who either bought or refinanced last year with historic low interest rates may be leery to move or refinance, given that they will be unlikely to get that same rate anytime soon. 

Yet given all this change, people will still move. Families and relationships grow and change, bending the complex housing needs to continue to evolve as well. Jobs are transferred or exchanged for another. There will always be a need for people to have a place to call home. So don’t be convinced the sky is falling. It is always a great time to buy or sell in real estate, and I am always happy to help you with questions you might have.