Nothing lasts forever, right? It’s not quite time to turn off the lights, but this summer may be the aging seller’s market last soiree, at least for the time being. Today’s Morning Brew, an online news publication, confirmed what I experienced during the past few weeks. See the article below:

You know that blissful feeling when you first step out of a sauna into room temperature? The housing market might be experiencing that right now. More signs are suggesting that the sizzling pace of US home price increases will start to ease.

The first sign: Sales of existing homes fell 2.4% in April to their lowest level in almost two years. It’s the third straight month they’ve declined, showing how record prices and skyrocketing mortgage rates have made potential homebuyers close their Zillow tabs in frustration.

“It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years,” Lawrence Yun, the chief economist at the National Association of Realtors, said.

That surge isn’t over…yet. The median price of an existing home jumped to an all-time high of $391,200 in April, an increase of 14.8% from a year earlier. And an average home on the market stayed there for just 17 days before going under contract.

But relief is on its way

The Atlantic’s Derek Thompson identified several clues that the housing market has indeed peaked:

  • The home inventory shortage, a leading contributor to the demand​​–supply imbalance, is starting to ease in the hottest markets, such as California and Colorado.
  • Google searches for “homes for sale” were down by double-digits in major cities such as LA, Boston, and SF in mid-March, according to Redfin.
  • Redfin agents also reported that they were getting fewer calls from potential buyers in major cities, and agents in California said the number of showings and offers had dropped off.

Bottom line: If “housing market downturn” gives you nightmares about the 2008 financial crisis, experts say this cooling-off period will be more ceiling fan than polar plunge. While the 2000s bubble was fueled by cheap credit, lax regulation, and rotten subprime mortgages, the boom over the last two years can be best explained by a sudden uptick in demand outpacing available supply.—NF

 

I do not think it is time to panic; I believe it is time to adjust expectations, especially if you are a seller. Sellers, your home may not enter escrow the first week it’s on the market. You may not receive multiple over-asking price offers, and you can expect to negotiate more. These small but significant market shifts will begin to reflect a move toward a balanced market.

On the other hand, buyers must remain patient while waiting for the changes to trickle down to individual locales and sellers. It will take time to rebuild the depleted inventory. Houses will continue to sell but at a slower pace. I consider this a shift in the market, not a housing market collapse.

Norma Toering

Broker/Owner

Charlemagne International Properties

310.493.8333 Text or Call

DRE:  01147470