Huy writes: What is your thought about the RE market from now to year end. YOUR OWN THOUGHT based on the date you have researched?
This is a great topic, and I really enjoyed covering FACTS about the real estate market!
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([00:18]):
Welcome back to The Real Investing Show. I am Tim Herriage. Thank you for stopping back by. Today, Huy writes, what is your thought about the real estate market from now to year end? And in all caps, your own thoughts based on the data you have researched? So the fact that you put all caps on your own thoughts, tells me that you don’t want me to regurgitate some other one article’s opinion, or just simply reshare something, which is I’m going to go down a rabbit hole here. It’s the biggest danger right now in the real estate market, is all the negativity out there.
([00:56]):
Percentages are going to be really misleading right now. I mean, you’re going to see these headlines that say, “Days on the market up 50%.” And it’s like, oh my God. And you feel like the sky is falling.
([01:09]):
But if days of the market are here are historically 90 in Dallas, Fort Worth and they go from five to eight, that’s a 50% increase. It still means nothing. A lot of people are talking about the price reductions right now, when yeah, there are a lot of price reductions, but from the data that I see, many of them, many of them still are above the median home price or the median dollar per square foot from 12 months ago.
([01:43]):
And so what people don’t understand is real estate’s very seasonal. And typically, we really kind of peak out in, I would say April May-ish in regards to new listings weekly, and then it starts going down. So right now, nationally, when you look at new listings, we’re below 2021, we’re below 2020, and we’re almost below 2019. So we’re literally trending farther below.
([02:17]):
And that’s like the comparable month in the year, right? You have to look seasonally at real estate. And that’s that’s new listings. So let’s look at pending sales. Where are we on pending sales? Pending sales are below 2021. They’re below 2020. And they’re almost to 2019 levels. And very much in line with previous years. Home sold. You go to home sold, now, this is interesting. There have been less home sold in this last 30-day period than any other year in the last four years. So there’s less homes that have sold in 2022 than in 2020, 2021 or 2019. Right?
([03:05]):
And I like to look at the Redfin data. If you just go to redfin.com/news/data-center/ you can look at it. And I’m just looking at the four week numbers. I mean, you can go 12 weeks and it’s still the same data, right? We’re really in line with other years, but then you click on new listing median price. And here’s the funny thing, right? The new listing medium price in the last 12 weeks ending as of last week, is right at 398,000. It is 400 grand. This time last year, the new listing price was 348. So nationally, the median new listing price is 50 grand above what it was last year. It’s 90 grand above what it was in 2020. And it’s a whopping 120 grand above what it was in 2019. So year-over-year, we’re still seeing new listings going on the market at approximately 14% more than last year.
([04:16]):
So what does that do? It means right now the median sales price in the United States is 389. That’s up 12% from last year. So you tell me how we’re having a crash or a correction or a cooling when the median sales price this month right now is still 12% higher than last year. And last year, by the way, was 20% higher than the year before that. And that year was 4% higher. And the year before was 4% higher. So we’re still three times kind of the pre-pandemic norms.
([04:51]):
Days to close. Let’s look at that. Everybody says, “Oh, it’s taking longer to sell.” Right now, right now, it is taking 26.9 days to close on a transaction. According to the data I’m pulling live right now, as I do this, if it’s taking 26.9 days to close the transaction, that’s got to be worse than last year. No, last year it was 28 days. So right now, the facts, the numbers, the data, it is taking 1.5 Days less in the last 12 weeks to sell a home than the previous year in that same time period.
([05:30]):
Let’s look at new listing median price for square foot. Because remember, home values are going down. That’s what everybody wants to say. Here we are, median list price per square foot, 14.63%. Up over last year. We’re at 211 a foot now, whereas last year we were at 185 a foot. So it’s just amazing to me.
([05:52]):
So surely, active listings. Active listings, right? If you listen to the media, active listings have just got to be out of control, right? Wrong. Just now, just now this week we crossed over last year. There are 754,000 active listings versus 745,000 a year before. So we’re up 1.29% year-over-year. That doesn’t sound bad to me. Now, here’s the interesting thing. Then you say, “Okay, well last year was kind of crazy. What about 2020?” Well guess what? If there’s three quarters of a million on the market right now, in 2020, there was basically a million.
([06:32]):
Well, what about 2019? 2019, that was a really good real estate market. Well, there were 1.2 million then. So basically what I’m telling you is there’s half a million less houses on the market right now, this time of this year than there was two years ago, three years ago, I’m sorry, 2019. 2 years ago, there was a quarter million more homes. Last year, there was 10,000 less. So yes, it’s up over last year, but last year was a ridiculously stupid year, in my opinion.
([07:02]):
Median days on the market. Guess what folks? Again, median days on the market right now, 18 days. Last year, 18.7. 2020, 40 days. 2019, 39 days. So we’re still half, half of what it was the year before the pandemic.
([07:22]):
Price drops. Now this is an interesting one. Price drops are way up this year, way up. I mean, just double, double, guys. It’s double. Yeah, it went from 3% to 6%. So only 6% of listings are actually having their prices dropped. That’s just not a lot. It’s just not a lot.
([07:43]):
And then you get the age of inventory. You would imagine that age of inventory’s got to be skyrocketing and more houses than any year before, they’re on there longer. Well, wrong. You got 31 right now. Last year, it was 32-and-a-half. The year before that 59-and-a-half. And the year before that, 55-and-a-half. So again, it’s well say percentage wise year over year, oh my gosh, it’s a lot more. But you got to look, percentages are really going to be very, very, very, very misleading.
([08:12]):
Now, months supply. You hear that there’s so much on the market the the months supply has got to be way out of hand. Well, here we are, 9.2 weeks of supply. It’s not a lot folks, it’s barely over two months. Last year, 7.7 weeks, month and a half. Right? So you could hear it was a 30% increase year-over-year. Oh my gosh. But really and truly, it’s still at 9.2 weeks in 2020, it was 12.5 weeks in 2019. The last time we were really as close to healthy as possible, it was 14. So you know what? That number will go up another 50%. 50%? Oh my gosh. But it would still be below half of half of normal.
([09:00]):
And pending sales, I’m almost out of time. Median sale price per square foot. You just got to look at that. I mean, look, it’s $208 a foot right now, right now, last week. And this time last year, it was a 183. So we’re still up 13.78% in median home price per square foot in all the Redfin metros, as of right this second.
([09:29]):
So, that was the longest one of these Real Investing’s I’ve done. And I just need to say the answer to your question is I feel like we’ve peaked on interest rates. I feel like that peaked in June 23rd, the week of June 23rd. I feel like the economy can’t take much more shock. We’ve already lost 20-some odd percent in the stock market values. And I feel like the worst is over. I feel like if you have an opportunity right now to buy something at or below the median home price at a little bit of a discount to get ready to fix and flip it, I think you should. I think mortgage rates come back down. I think by September, the Federal Reserve realizes they’re measuring against old numbers, not new numbers and rates start coming down.
([10:12]):
So that’s my take, Huy. Thank you for writing in. If you like this episode, please do me a favor, go subscribe. Give me a rating or review. And just so you know, if you have any questions, hop over to ihavelunchmoney.com. Submit your questions. I can’t wait to hear from you. Thanks for your time. We’ll see you-
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Thanks!
Tim, Thanks for taking time on your inputs, great analysis! These are what I want to hear. I stay away from media nowadays.