Housing Market Update: How to Keep the Headlines in Context
With buyers battling over limited listings and prices soaring, the media has been flooded with dramatic headlines about the present state of real estate: “76 all-cash offers on one home.” “How hard is it to buy a home right now? ‘Beyond crazy and frustrating.’” But even in a strong market, it helps to gain context for a deeper understanding of those eye-catching numbers so you can better explain the current housing economy to your clients.
Read on for national housing research from the Keller Williams research team that informs on the current state of the market. When you’re finished, make sure to review your local MLS for the most accurate picture of the market, so you can help your clients navigate the present-day landscape with confidence.
Big Numbers and What They Mean for Real Estate
When it comes to interpreting the numbers you see on the news, context is king. “For the most part, those big jumps and those big gains are being caused by how low things were a year ago rather than how high they are now,” says Jim Talbot, director of research at KWRI. “So they’re not a guide to what’s going on right now. They’re definitely not a guide to what your clients should be doing or how you should be viewing your business. You’ve got to protect yourself and your clients from those clickbait headlines.”
Talbot offers a three-step plan for gaining a deeper understanding of news stories:
1) Read past the headline. The purpose of the headline is to draw you into the story, but the story will typically delve a little deeper and give you a jumping off point for seeing if there are similar numbers and trends in your own market.
2) Know your numbers. The contrast to the low periods of 2020 is what’s making the current numbers look so dramatic. Try comparing the same numbers to 2019 to get a truer sense of the current market.
3) That means your local numbers too. Always pay attention to your local MLS to stay on top of what’s happening in your market.
Now Is the Time to Keep in Touch with Your Clients
Your clients rely on you to put the market in context for them. They’re likely seeing these big headlines pop up on social media and the news, so help them understand what those numbers mean for them and for your market. “This is really your opportunity to dig in and bring your expertise and help out,” Talbot says. “We always know that one of the best things that you can do to ensure that you’re the agent that comes to mind when it is time for someone to buy or sell a house is to bring value to the conversation. And, this is an opportunity to bring real value.”
Dig into the following statistics in order to provide a more well-rounded picture of the market for your clients.
U.S. Housing Market Update
• Existing home sales checked in at a seasonally adjusted rate of 5.85 million in April, marking a slight dip of 2.7% from March. “Even though you’re seeing sales tick down a little bit, that’s nothing to worry about,” Talbot says. “Demand continues to outstrip supply, which is preventing sales from rising even further. There’s clearly so much demand out there that if there was more available supply, I think we would be selling more homes.”
• April’s existing home sales are up 33.9% from the same period last year. In April 2020, sales fell to 4.37 million, one of the lowest levels in recent years.
• For a more accurate comparison, go back to April 2019. The current period shows growth of 12.3% over April 2019, which is a strong sign of growth for a two-year period.
• Even though the seasonally adjusted sales rate has dipped slightly for April, the unadjusted rate showed growth for March (484,000) and April (513,000) over February (366,000).
• The trend of a slight dip from the preceding month and a mammoth jump over the previous year was echoed in new home sales stats for April. The seasonally adjusted annualized rate of 863,000 is down 5.9% from March but up 48.3% from April 2020. “We expect new home sales to continue at a very strong clip all year simply because there’s just not enough inventory of any sort out there,” Talbot says.
• The median home sale price of $341,600 for April is up over last month as well as last year for a 4.7% year-over-year price gain. “It’s a good balance between homeowners seeing appreciation and not outstripping wages so much that homes get unaffordable,” Talbot says. • Mortgage rates continue to fluctuate around 3%, a historically low level.
Watch the full housing market presentation by Jim Talbot, director of research at KWRI, which is available exclusively to KW agents.