Today's Real Estate Market: The Unicorns Have Galloped Off

When it comes to comparing real estate metrics from year to year, it can be challenging in a normal housing market -- and the last few years have been anything but normal. The variability in the market can make the comparisons less meaningful or accurate, as unpredictable events can (and did!) have a significant impact on the circumstances and outcomes being compared.

In the past few years, the real estate market experienced significant changes due to the pandemic. The demand for homes skyrocketed as people sought their own space, including a home office and a spacious backyard. First-time and second-home buyers flooded the market, and historically low mortgage rates reached even lower levels. Additionally, the forbearance plan helped prevent foreclosures, and home values saw unprecedented appreciation levels. It truly was a market that was "greatly desired but difficult or impossible to find" - aka, a 'unicorn' year.

However, things are now returning to normal, and the 'unicorns' have galloped off; comparing today's market to those years no longer makes sense. Here are three key examples:

1. Buyer Demand

Despite what the headlines may suggest, there are still plenty of buyers in the market. In fact, we continue to sell over 10,000 houses a day in the United States. While buyer demand may be lower compared to the 'unicorn' years, it remains strong when compared to more normal years (2017-2019).

2. Home Prices

We cannot compare today's home price increases to the extraordinary numbers of the last couple of years. The appreciation rates in 2020 and 2021 were historic. However, when we look at the more normal years of 2017-2019, we can see that we are returning to a more typical pattern of home value increases.

3.Foreclosure

There have been alarming headlines about increased foreclosure filings. It's important to note that these percentages are based on historically low foreclosure rates. With the end of the moratorium on foreclosures, there will naturally be an increase in filings compared to the past three years. When we put the current numbers into perspective, we realize that they are returning to the normal filings seen from 2017-2019.

It's essential to approach the housing market headlines with caution this year. Many of these headlines make inappropriate comparisons to the 'unicorn' years. As your real estate professionals, we're here to help you navigate through the market and provide you with the proper perspective!