By Jim Lowenstern
The current state of the world has had clear impacts on our nation’s, as well as many others economy. Each and every industry is having it's own set of impacts and In the real estate industry this can be seen clearly in the dramatic increase in property listing prices as well as the decrease in the number of homes for sale thereby creating a very competitive environment for buyers.
Many homeowners are not motivated to sell their properties. On a personal level, we can understand this; our current economy is not the most welcoming to those interested in buying and selling property. From a business standpoint, this is creating a tense and competitive environment for those who are buying and selling property.
Redfin's MLS data reveals that in 2022 “the median home sale price was up 17% year over year,” the “median asking price of newly listed homes increased” by 14.8%, and the “homebuyer mortgage payments” increased by 28.1% (Redfin). These are dramatic increases from 2021 and 2020. FORTUNE deems this increase in mortgage rates as the housing market’s “biggest test yet” (FORTUNE). The threat of locking buyers out of opportunities is posed amidst dramatic rate increases and record-high prices.
Not only are sales and asking prices increasing dramatically, but the number of active listings have decreased by 23%. Redfin reports that “59% of homes that went under contract had an accepted offer within the first two weeks on the market, an all-time high. This was up from the 53% rate of a year earlier” (Redfin). It is apparent that the competition amongst buyers is severe. With a dramatic increase in prices and a decrease in the number of posted listings, buyers are eager to get their hands on property. Thus, we can see quicker reaction times from buyers. This results in a decrease in the length of time that the average listing stays on the market after being posted.
Despite the fact that the current economy has created such a competitive market, there is still a clear demand for property. As a result, one question remains: how do we navigate this market? FORTUNE offers the insight that “the current rate of home price growth isn’t sustainable: Simple economics dictates it can’t outpace income growth” (FORTUNE). In other words, we should lean into these dramatic increases in prices because it may be the very solution to the market’s mayhem.