Is the RE Market Shifting? Good question.
Do a quick google search on the real estate market, and you will find lots of articles giving you their point of view. Many of the articles are saying that the market will remain strong due to the low supply of houses for sale. See here in this Forbes article below:
In December 2021, CBRE research found, “Despite uncertainty from the omicron variant and other risks, a growing economy will fuel demand for space and increase real estate investment across all property types.
While the Forbes article is speaking from an investment standpoint, the same comments can be found for single-family home prices as well. Take a look at this article on realtor.com:
Home Prices: Advance at a More Moderate Pace, but Continue to Set Records.
What are we seeing happening today that was not happening even a few months ago?
Doing a quick search for single-family homes/townhomes/condos in your city will pull up most of those properties for sale. I did a search on 6/2/22 for each of these areas: Helena, MT, Kalispell, MT, Missoula County, MT, & Ravalli, MT pulls up what’s for sale. Then I counted the number of homes that are now showing some type of discounted price. Here is what I found:
Helena, MT is showing 23% of properties with a discount. Kalispell, MT is showing 23% of the properties with a discount. Missoula County, MT is showing 13% of properties with a discount. Finally, Ravalli County, MT is showing 27% of properties with some type of discount.
I think that is giving us a window into a shifting market. The discounting that is now being seen is going to help RE Agents work with their clients to moderate their clients’ expectations in pricing their homes on the market. No one wants to see their home sitting on the market because it is overpriced.
Our current market does tend to look a bit like the market in the late 1970s. That was a time similar to today with the Fed raising interest rates to help curb inflation. Taking a look at this chart showing interest rates, we see the prime rate going from 7% in 1977 to 18% in 1980. This had a significant impact it had on the housing market.
What happened to the housing market in that same timeframe? Take a look at this chart: The housing market had peaked in 1978 for # of home sales and by 1982 was down 50% OR total sales were cut in half.
What does that mean for us today? What can we glean from other “recessionary” type moments?
Those are all good questions and there is no crystal ball for their answers. Here is a great article by Chelsea Levinson of Homelight.com. This article was published in May of 2020. In this article, Chelsea compares 5 “recessions” experienced in the USA from the 1980s to the present. During the 5 recessions, housing prices are minimally impacted. The bottom line from the article is. . .
“The benefit of low inventory is, you can get a good price for your home. And when you’re buying your next home, you have a low interest rate,” Frohriep says.
Looking at a summary of the details that Chelsea pulled together you can make your own conclusions about what will happen as we head into the 2nd half of this year.
I would love to hear your thoughts about what you see happening in the real estate market as we continue to move through 2022. Give us a call, and let’s get a coffee, on Inspect Montana.
If you are already in the market and in need of a property inspection, click the link below to schedule your inspection online: