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

Comparing real estate metrics from one year to another can be challenging in a normal housing market. Thats due to possible variability in the market making the comparison less meaningful or accurate. Unpredictable events can have a significant impact on the circumstances and outcomes being compared.

Comparing this years numbers to the two unicorn years we just experienced is almost worthless. By unicorn, this is the less common definition of the word:

Something that is greatly desired but difficult or impossible to find.

The pandemic profoundly changed real estate over the last few years. The demand for a home of our own skyrocketed, and people needed a home office and big backyard.

• Waves of first-time and second-home buyers entered the market.
• Already low mortgage rates were driven to historic lows.
• The forbearance plan all but eliminated foreclosures.
• Home values reached appreciation levels never seen before.

It was a market that forever had been greatly desired but difficult or impossible to find.A unicorn year.

Now, things are getting back to normal. The unicorns have galloped off.

Comparing todays market to those years makes no sense. Here are three examples:

Buyer Demand

If you look at the headlines, youd think there arent any buyers out there. We still sell over 10,000 houses a day in the United States. Of course, buyer demand is down from the two unicorn years. But, according to ShowingTime, if we compare it to normal years (2017-2019), we can see that buyer activity is still strong (see graph below):

Home Prices

We cant compare todays home price increases to the last couple of years. According to Freddie Mac, 2020 and 2021 each had historic appreciation numbers. Heres a graph also showing the more normal years (2017-2019):

We can see that were returning to more normal home value increases. There were several months of minimal depreciation in the second half of 2022. However, according to Fannie Mae, the market has returned to more normal appreciation in the first quarter of this year.

Foreclosures

There have already been some startling headlines about the percentage increases in foreclosure filings. Of course, the percentages will be up. They are increases over historically low foreclosure rates. Heres a graph with information from ATTOM, a property data provider:

There will be an increase over the numbers of the last three years now that the moratorium on foreclosures has ended. There are homeowners who lose their home to foreclosure every year, and its heartbreaking for those families. But, if we put the current numbers into perspective, well realize that were actually going back to the normal filings from 2017-2019.

Bottom Line

There will be very unsettling headlines around the housing market this year. Most will come from inappropriate comparisons to the unicorn years. A real estate professional is a great resource to help you keep everything in proper perspective.