In this article, we will explore current trends that are impacting the overall housing market. We will discuss rising rents, low Inventory, days on market, and tech layoffs. We will also look at how these factors have affected the housing market over the past year and what we can expect in the coming year.
The housing market has been in a state of flux over the past year. Home prices have been dropping in some areas, mortgage rates have been rising, and the availability of credit has been tightening. Now let’s explore these trends in detail.
Housing Market Update, Nov 2022. In this video, Karan talks about all that is happening in the current housing market. With lots of changes occurring in the overall economy, there is an undertone of uncertainty about what is going to happen to the housing market and home prices. Karan discusses rental trends, seller intentions, housing inventory, and more to get a deeper understanding of what is happening inside the housing market. If you are a buyer, seller, or renter this video is for you!
Housing Market Effects on Rising Rents
There are a number of factors that have contributed to the rise in rent. Firstly, there has been a decline in housing inventory, as first-time buyer demand was surging high from 2020 till date. This led to a shortage of rental units, which drove up rents. Additionally, landlords now are able to charge more for rent because there is so much competition for housing. Another factor that has come into play in recent months has been the rising interest rates that have caused mortgage payments for buyers to go up 50% YOY. As fewer people can afford homes, we will continue to see a higher demand for rental units and eventually higher rental rates.
Real Estate Market & Low Inventory
There are a number of factors that have contributed to the decline in housing inventory. Firstly, there had been a decline in housing starts, as builders were not constructing as many homes as they used to. Then we saw the rising demand for housing in 2020 that really through off the supply and chain cycle, causing prices to rise by 30% in some markets! And now a lot of sellers are holding off from listing their homes because they are expecting to sell their homes at the same value their neighbors sold during the recent price boom.
The reality is that we are not in that type of seller’s market right now and sellers cannot command the same kind of terms they were in 2021. In California, statewide there is about 3 months of inventory of homes and economy experts say that when that number reaches 6 months that is when we can consider a real market decline that can lead us on the road to a true buyer’s market! We are far away from that at this point in time!
Days On Housing Market
The housing market is changing in terms of how long it takes to sell a house. In the last two years, it has taken an average of 10 days to sell a house. However, in today’s market, it is taking an average of 28 days to sell a house. This means that there is less buyer demand in the current housing market. One main factor that has contributed to this is the availability of credit, it has become harder for first-time buyers to qualify for a home due to the high-interest rates.
Despite these trends, homes are still selling and home values are holding on strong. You can argue that in some markets we are seeing price drops but it is not impacting the masses, yet. The X factor here will be the job market and layoffs. If we are able to retain jobs or quickly find a replacement job if laid off, we should be fine!
Tech Layoffs
The technology sector has been one of the hardest hit by layoffs. Companies like Microsoft, Yahoo, Intel, Amazon, and Meta have all announced significant job cuts in recent months. There is one primary factor for this trend and we look at the most important question, How will layoffs impact the housing market?
The tech industry is facing a slowdown in sales caused by the policies put in place by the Federal Reserve Bank to slow down inflation. We all know that the economy needs to slow down in order for us to get a grip on the rising prices of goods. But this slowdown has caused companies to reduce their workforce in order to save money. When the economy was booming and inflation was on the rise, every sector saw a rise in profits and market share. And companies hired employees, added products and services, and borrowed more money to increase expansion based on future growth assumptions (which is a natural way for any company to force cast).
Now, with the slowing down economy and diminishing gross revenues the companies have no choice but to lean down. Every small, medium and large business is in survival mode: increase profit margins by cutting costs and focus on delivering more value to customers to retain market share!
The housing market has been on a roller coaster ride over the past year. Prices have been rising and falling, mortgage rates have been going up and down, and the availability of credit has been fluctuating. This has made it difficult for people to buy or sell homes. Despite these challenges, however, housing prices have continued to rise in many areas over the past year. This is largely due to strong demand from both investors and first-time homebuyers.
Looking ahead, it seems likely that housing prices will continue to stay strong if the job market can remain stable. It is really going to depend on how easily folks find replacement jobs and if we can slow down layoffs and have a smooth landing! Despite all this, there are still deals to be made and homes to be bought that fit your lifestyle and build equity for you. Run your numbers to find out if your mortgage payment is lower or the same as your rent.
No need to panic because markets will do what they do! We are all in this together, so embrace yourselves and watch the market closely.
