Temperatures are rising, the sun is setting later, and the daffodils are starting to peek their green leaves out of the earth \u2014 spring is coming. And just like the bears who are starting to wake up from their long winter naps, homebuyers and sellers are coming out of hibernation\u2026 or at least they normally do.<\/p>\n\n\n\n
Nationwide, pre-pandemic the first week of February typically marks the lowest point for housing inventory during the year, as sellers return to the market in time for spring, but since the onset of the pandemic this predictable trend has been thrown out the window.<\/p>\n\n\n\n
\u201cThe pandemic<\/a> definitely changed the real estate market<\/a>,\u201d Todd Alperin, a Better Homes and Gardens Real Estate The Masiello Group<\/strong> agent based in Southern New Hampshire, said. \u201cComing into the pandemic we had a low inventory environment, and the pandemic intensified the inventory shortage, and it has really created major issues for the real estate market.\u201d<\/p>\n\n\n\n According to Mike Simonsen, the president of Altos Research<\/strong>, to see housing inventory fall throughout February, as it has this year, is pretty unusual.<\/p>\n\n\n\n \u201cPrior to the COVID-19 pandemic, it was normal for inventory to rise in February as the spring home sellers began listing their homes and buyers weren\u2019t yet out in force,\u201d Simonsen wrote in his February 13 housing market update<\/a>. \u201cBut in 2020 through 2022, buyers came out quickly after the new year and inventory didn\u2019t hit bottom until much later in the spring.\u201d<\/p>\n\n\n\n Housing inventory<\/a> has been falling nationally since late October, after hitting a two year high of a 7-day average of 577,172 homes on the market according to Altos.<\/a> As of February 24, 2023, the 7-day average for inventory was 429,757 and close observers don\u2019t expect this to change much in the upcoming weeks.<\/p>\n\n\n\n \u201cInventory is falling pretty quickly now, which is really a surprise,\u201d Simonsen said. \u201cMy expectation is that if rates stay higher in the sixes or sevens for a few years, over that time, we will get a bit more inventory each year and we\u2019ll work our way back to normal.\u201d<\/p>\n\n\n\n HousingWire<\/strong>\u2019s lead analyst Logan Mohtashami added: \u201cFor almost 10 years now inventory has slowly been falling lower and lower because people get a house with a fixed rate mortgage and over time their income typically increases, but their shelter cost remains the same, so it becomes a really good deal for them. Inventory is higher than it was last year, but we are working from all-time lows. The way that inventory will grow is if mortgage rates stay high enough for long enough and homes take longer to sell.\u201d<\/p>\n\n\n\n In late fall of 2022, as buyers grappled with mortgage rates doubling in a matter of months and sellers adjusted to the shifting market, many agents felt like the market was on the precipice of returning to \u201cnormal.\u201d<\/p>\n\n\n\n \u201cMy team and I are seeing more \u2018normal activity\u2019 in the market,\u201d Kent Redding, an Austin, Texas-based Berkshire Hathaway Home Services<\/strong> agent, told RealTrends<\/strong> in November<\/a>.<\/p>\n\n\n\n While Redding says market conditions have continued to remain well below the frenetic pace of the 2021 and early-2022 housing market, he said they have not<\/em> returned to the normal he was anticipating. <\/p>\n\n\n\n \u201cWe are seeing some modest increases, but the pressure is still there for the buyers,\u201d Redding said. \u201cPersonally, in my business, I am decently busy getting sellers ready to go to market in March and April and it is easier because sellers are beginning to understand that what we had before was abnormal and now things are starting to resemble more normal trends for price increases and days on market.\u201d<\/p>\n\n\n\n Redding noted that while he does expect inventory to pick up come March and April, he expects there to be roughly 8,500 homes on the market, which is still below the October 2022 peak of roughly 10,000 homes.<\/p>\n\n\n\n Up in Southern New Hampshire, Alperin is expecting similar trends.<\/p>\n\n\n\n \u201cI don\u2019t think we are going to see a huge bump in inventory any time soon, but I think we will see some additional homes come on the market over the next few weeks, as would typically happen in spring,\u201d Alperin said.<\/p>\n\n\n\n The timing of the uptick in housing inventory feels like it is following pre-pandemic normal seasonal trends, Alperin said. But so far, the size of the uptick is nowhere near what it normally would be, a trend he expects to continue throughout the rest of the year.<\/p>\n\n\n\n \u201cI don\u2019t see a big push of inventory coming on the market because many potential sellers are having second thoughts about selling,\u201d Alperin said. \u201cSo many people went and refinanced when the mortgage rates were in the 2%-3% range and they don\u2019t want to lose that lower interest rate by moving to another property. And then the low inventory is keeping other sellers on the sidelines because they are nervous about where they are going to go if they sell.\u201d<\/p>\n\n\n\n In addition to the typically timed arrival of the spring selling season, Alperin said other aspects of the Southern New Hampshire housing market have also returned to more normal conditions, including a slowdown in home price appreciation and fewer bidding wars.<\/p>\n\n\n\n \u201cIt depends on the community and the price range, but we are not seeing things go dramatically over asking when there is a bidding war anymore,\u201d he said. \u201cIt is maybe $10,000 or $15,000 at most.\u201d<\/p>\n\n\n\n But Megan Fox, a Compass<\/strong> agent based in Bergen County, New Jersey, said that isn\u2019t quite the case in her market.<\/p>\n\n\n\n \u201cWe are still seeing multiple offers and open houses are canceled all the time because we are getting multiple offers within the first few days,\u201d Fox said. \u201cI almost feel like right now we have even more of a situation on our hands than we did in 2021 and early 2022 because there is no inventory and we still have a lot of buyers relative to the amount of inventory in our area. Everyone is fighting over the same handful of homes.\u201d<\/p>\n\n\n\n Earlier in February, Fox said a home went on the market in her metro area and received 18 offers within days of listing and ended up going for $150,000 over asking.<\/p>\n\n\n\n \u201cYou are still seeing those really big jumps above asking,\u201d Fox said.<\/p>\n\n\n\n Her experience is backed up by the data. In January, 41% of resale listings<\/a> in the Northeast received multiple bids, according to John Burns Real Estate Consulting<\/strong>.<\/p>\n\n\n\n According to data from Altos Research<\/a>, the 90-day average median list price in Bergen County has been trending up since early February of 2022, rising from $639,000 to $799,000 as of February 24, 2023. Meanwhile, inventory has steadily declined since September 2022 falling from a 90-day average of 1414 homes on the market to 777 homes on the market as of February 24, 2023.<\/p>\n\n\n\n Despite the challenging conditions, Fox is optimistic things will get at least marginally better come March and April.<\/p>\n\n\n\n \u201cPre-pandemic the spring market was our largest market and this year I definitely think we are going to see a stronger market come spring,\u201d she said. \u201cI do see some people preparing to get their homes on the market now and we are really encouraging all our prospective sellers that now is still a good time to list.\u201d<\/p>\n\n\n\n Down in Miami, Mike Martirena, a local Compass agent, is also dealing with very low inventory, but he has not seen bidding wars, especially ones like Fox described, since the height of the market in 2021 and early 2022.<\/p>\n\n\n\n \u201cPrices are remaining pretty stable,\u201d he said. \u201cThey have come down maybe a percent or two from the height, but I expect them to remain pretty stable this year.\u201d<\/p>\n\n\n\n While not all metros are experiencing massive bidding wars, driving home prices even higher anymore, home prices are still elevated and the lack of supply is hurting agents.<\/p>\n\n\n\n \u201cInventory is really holding the market back from returning to a more pre-pandemic normal,\u201d Fox said.<\/p>\n\n\n\n Coupled with a slower than expected disinflation rate<\/a>, some agents are concerned this could potentially mean more aggressive action from the Federal Reserve<\/strong>, but Mohtashami feels the Fed<\/a> should take a different course of action.<\/p>\n\n\n\n \u201cThe Fed talked about a housing reset, but you can\u2019t run monetary policy based solely off of home prices,\u201d Mohtashami said. \u201cThe Federal Reserve said they wanted to get rates to a certain level and just let it stick and they should just stick with that because if the economy starts to get weaker, bond yield will get ahead of them. I think the Federal Reserve just wants to get a few more rate hikes in and just stop and see what happens. They shouldn\u2019t panic on any positive or negative move either way, they should just hold their ground and see when the labor market breaks. But the Fed rate hike story is coming to an end.\u201d<\/p>\n\n\n\n Back in Southern New Hampshire, Alperin is keeping a close eye on the Fed and their interest rate plans.<\/p>\n\n\n\n \u201cThe Fed has been super aggressive in increasing interest rates,\u201d Alperin said. \u201cWe are seeing interest rates now that have basically doubled in less than 12 months, but we haven\u2019t had the supply of houses come back. With such little inventory, I just think something needs to change in order to get the balance back.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Industry experts have said the market and inventory returning to normal, but agents say that isn’t the case in many markets across the country.<\/p>\n","protected":false},"author":34740,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[1760],"class_list":["post-4055","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"\nWhat happened to \u2018normal\u2019?<\/h2>\n\n\n\n
How do we get back to \u2018normal\u2019?<\/h2>\n\n\n\n