5 Reasons Today’s Housing Market Isn't Normal
If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:
1990s: 8.12% I bought my first house in the mid-'90s at an 8.5% interest rate!
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
2. Home Price Appreciation
According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14% nationwide. Utah has an even higher appreciation rate!
According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year nationally, which will be greater than any year since Black Knight began collecting this data. Salt Lake County has seen 25% home price appreciation!
Currently, home price appreciation is anything but usual, typical, or routine.
3. Months’ Supply of Inventory (Homes for Sale) According to NAR:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”
As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply. In Salt Lake County there is less than a 3 week supply of inventory. However, that is up since the springtime when we had less than a week's worth!
Currently, the supply of homes for sale is anything but usual, typical, or routine.
4. Days It Takes To Sell a Home
The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days nationally. In Salt Lake County, it is 8 days on average!
Currently, the days-on-market metric is anything but usual, typical, or routine.
5. Number of Offers per Listing
According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5. I have participated in selling a home with 98 offers on it this spring. My offer was the winning bid! Although we are still seeing multiple offers, the number of multiple offers has reduced dramatically.
Currently, the number of offers per listing is anything but usual, typical, or routine.
Mortgage rates are near historic lows
Price appreciation is at historic highs
Housing inventory is less than half of the normal amount
The time it takes to sell a home is cut in half, and
There are twice as many offers on each house
…it’s hard to say we’re in a normal market.