Oh, my gosh, now, this is a terrifying chart right here. That dip for 2022!
But don’t worry. I’m going to break this all down for you.
This is the Cromford Market Index for housing and it shows how hot the real estate market is. As you can see, right now, it’s plummeting.
Now, before you panic and make any crazy, rash decisions, let me explain what this means to you as a homeowner and how you should think about this, particularly if you’re making a decision about selling a home or buying a home in the near future.
I included the line 2015 in there because it was sort of a normal year and it can help put things in perspective. Normally, it’s around 100, which means it takes about five, or six, months to sell homes. In other words, if we don’t get more listings, we’ll run out of houses in six months.
Now, that’s pretty normal, taking six months to sell. But right now, we’ve gotten used to this whole other world with houses selling in like one day and we’re entertaining twenty offers. But, around this February things started to plunge.
What does the plunging market mean to me?
Right now, we’re not just seeing a decrease. It’s a rapid decrease. The market is changing, honestly, much faster than I anticipated. I thought it was going to change but not this fast. It’s pretty crazy. But, what’s good is that it makes sense. It should be slowing down. Interest rates are higher. Prices are higher. Homes are less affordable. All of these factors should affect the market. When everything keeps going up, that’s bubble territory.
You can think of this dip as a correction and this correction is good given the market heat. However, it’s not quite showing up in prices yet. You can think of it like a locomotive that was going full steam out of control and is now slowing down. It doesn’t slow down fast.
What does this slow down look like in terms of price changes per week?
Now that things are plunging let me show you kind of what that ends up looking like in the statistics. Check out the chart below. It’s is a graph of the price changes per week.
That little spike at the end is right now and you can see that it’s going through the roof right now. Usually, price changes decrease over time. You don’t typically list a home for a million dollars and then raise the price the next week. Typically, if the house doesn’t sell, you’re going to lower the price. So, we are seeing price decreases increasing dramatically, getting back to where we were in May of 2019.
So, what does this mean for you as a seller?
Well, as a seller, you should know that it’s a very likely scenario that you list the house and it doesn’t sell right away. It’s gonna take a little bit of time. You might have to adjust the price. That’s pretty normal, after all, and we’re getting back to that spot.
We also see days of inventory climbing
You can check that out above. Right now the running average is 67 days. And, as you can see in the chart, that’s really low. It should be higher in that 80 day range, which is like six months. So we’re seeing that it’s got pulled down because of all the crazy heat of the market. But what we’re seeing now is this big jump. It was about 15 days like two months ago and now it’s spiking here to 35 days now. So, it’s more than doubled in the last two months or so. This just means that there are more homes for people to pick from as buyers.
What does all this mean for you as a homeowner?
Well, if you’re looking to sell, it’s still competitive and there are still multiple offers going out on each property. The Cromford index is still high at 320, but it’s falling quickly. So, it will be less competitive in a month.
If you’re going to sell now, or in two months, I’d probably push you to do it sooner rather than later because the momentum downward isn’t slowing down. I think we’re going to see that continue for a while. Now, this thing could level out like we saw last year, but I would say, right now, the way the market’s trending, you’re better off selling probably today than you would be in a month or two.
If you’ve got a long time horizon, I’d say there’s no hurry. Me, for instance, I love my house. I live in it and I have no intention of selling it anytime soon and I have rental properties that I’m not going to sell because that’s a long play for me. I know that the market has its ups and downs and I’m totally fine riding those things out. And, frankly, I don’t have a better place to put my money. I’m happy with the return I’m getting on those properties. But, if you’ve got some incredible place to put the money, now might be a good time to cash out for you because if you are going to list your home in today’s market it’s still likely to sell pretty quickly and we can probably get that thing sold for you.
I hope this helped.