Over the past two years, the substantial imbalance of low housing supply and high buyer demand pushed home sales and buyer competition to new heights. But this year, things are shifting as supply and demand reach an inflection point.

The graph below helps tell the story of just how different things are today.

This year, buyer demand has eased as higher mortgage rates and mounting economic uncertainty moderated the market. This slowdown in demand is clear when you look at the red bar on the graph. It uses the latest data from ShowingTime to illustrate how showings (an indicator of buyer demand) have softened by just over 12% compared to the same time last year.

Now for a look at how housing supply has changed, turn to the green bar. It uses data from realtor.com to show active listings are up nearly 27% compared to last year. That’s because the moderation of demand allowed housing inventory to increase in 2022.

What Does This Inflection Point Mean for Buyers?

If you’re thinking of buying a home, you’ll have less competition and more options than you would have had last year. Enjoy having more homes to choose from in your home search and lean on a trusted real estate professional to understand how the increase in supply has also increased your negotiation power. That professional can talk you through the opportunities and challenges buyers face in today’s shifting market. You may be surprised to find they’re different than they were a year ago.

What Does This Inflection Point Mean for Sellers?

If you’re looking to sell your house, know that inventory is still low overall. That means, if you work with an agent to price your house based on current market value, it will still sell despite the inventory gains and moderating buyer demand this year. That’s because there are still buyers out there who want to move, and your house may be exactly what they’re looking for.

Bottom Line

If you’re thinking of buying or selling a home, the best place to turn to for information on today’s supply and demand is a trusted real estate professional. Let’s connect so you know what’s happening in our local market and what that means for you.

While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.

You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still buy a home right now?” If that question is top of mind for you, here’s what you need to know.

Homeownership Is Historically a Great Hedge Against Inflation

In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrate, explains:

“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”

And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:

“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”

When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.

Becoming a homeowner, if you’re ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.

Bottom Line

The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, let’s connect.

One of the biggest questions people are asking right now is, and a great question to ask your REALTOR is: what’s happening with home prices? There are headlines about ongoing housing price appreciation, but at the same time, some sellers are reducing the price of their homes. That can feel confusing and makes it more difficult to get a clear picture.

Part of the challenge is that it can be hard to understand what experts are saying when the words they use sound similar. Let’s break down the differences among those terms to help clarify what’s actually happening today.

• Appreciation is when home prices increase.
• Depreciation is when home prices decrease.
• Deceleration is when home prices continue to appreciate, but at a slower or more moderate pace.

Experts agree that, nationally, what we’re seeing today is deceleration. That means home prices are appreciating, just not at the record-breaking pace they have over the past year. In 2021, data from CoreLogic tells us home prices appreciated by an average of 15% nationwide. And earlier this year, that appreciation was upward of 20%. This year, experts forecast home prices will appreciate at a decelerated pace of around 10 to 11%, on average.

The graph below uses the latest data from CoreLogic to help tell the story of how home prices are decelerating, but not depreciating so far this year.

As the green bars show, home prices appreciated between 19-20% year-over-year from January to March. But over the last few months, the pace of that appreciation has decelerated to 18%. This means price growth is still climbing compared to last year but at a slower rate.

As the Monthly Mortgage Monitor from Black Knight explains:

“Annual home price growth dropped by nearly two percentage points . . . – the greatest single-month slowdown on record since at least the early 1970s. . . While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”

Basically, this means, while moderating, home prices are still far above the norm, and we’d have to see a lot more deceleration to even fall in line with more typical rates of home price growth. That’s still not home price depreciation.

The big takeaway is home prices haven’t fallen or depreciated nationwide, they’re just decelerating or moderating. While some unique and overheated markets may see declines, nationally, home prices are forecast to appreciate. And when we look at the country as a whole, none of the experts project home prices will net depreciate or fall. They’re all projecting ongoing appreciation.

Bottom Line

If you have questions about what’s happening with home prices in Las Vegas, I am your REALTOR. Book an appointment with Jordan to discuss your real estate goals.

If you’re a homeowner or are planning to become one soon, you’re probably looking for clear information about today’s housing market. And if you’ve turned to the news or even just read headlines recently, you might feel like you’re left with more questions than answers. The best way to make sure you get what you need is to work with an expert.

Why You Want To Lean on a Trusted Professional

With any big milestone in life, it’s wise to seek advice from people who are experts in their field.  While you likely want that advice to be perfect, perfect simply isn’t possible. But professionals have the knowledge and experience to be able to provide you with the best advice for your situation.

For example, let’s say you need an attorney, so you seek out an expert in the type of law required for your case. They won’t immediately tell you how the case is going to end or how the judge or jury will rule. But what a good attorney can do is discuss the most effective strategies based on their experience and help you put a plan together. They’ll even use their knowledge to work with you to adjust as new information becomes available.

Similarly, the job of a trusted real estate professional is to give you the best advice they can. Just like you can’t find a lawyer to give you perfect advice, you won’t find a real estate professional who can either. That’s because it’s impossible to know exactly what’s going to happen throughout your transaction. But an expert real estate advisor knows market trends and the ins and outs of the homebuying and selling processes.

They’ll use that knowledge to explain both the national headlines and what’s happening in your local area. That way, you have the best of both worlds and can feel confident in your decision to buy or sell. Freddie Mac explains why having an expert on your side is so essential:

“The success of your homebuying journey largely depends on the company you keep. . . . Be sure to select experienced, trusted professionals who will help you make informed decisions and avoid any pitfalls.”

With their expertise, a real estate advisor can anticipate what could happen next and work with you to put together a solid plan. Then, they’ll guide you through the process, helping you make decisions along the way. That’s the very definition of getting the best – not perfect – advice. And that’s the power of working with a real estate advisor.

Bottom Line

To get expert advice when you buy or sell a home this year, let’s connect today.

If you’re thinking about selling your house, you may have heard about the housing market slowing down in recent months. While it’s still a sellers’ market, the peak frenzy the market saw over the past two years has cooled some. If you’re asking yourself if you’ve missed your chance to sell your house and make a move, the good news is you haven’t – motivated buyers are still out there. But you do need to price your house right for today’s market. Here’s why.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”

It’s true buyer demand has slowed over the past few months as higher mortgage rates made it more expensive to buy a home. The result is fewer bidding wars and less competition among buyers (see visual below):

But don’t forget – that’s compared to the severely overheated market we saw over the past two years. According to the latest Confidence Index from NAR:

“. . . 39% of homes sold above list price, down from 51% a month ago and 50% a year ago.”

While this is a slower pace than even one month ago, serious buyers are still actively in the market, and they’re buying homes that are priced right. In fact, the Confidence Index also notes the average home is selling in just 14 days.

If you’re aiming to sell your house, be sure you’re working with your agent to price it for today’s housing market. As buyer demand softens, it’s important to understand this isn’t the same market as last year. It’s not even the same market as just a few months ago. But it is still a sellers’ market.

If you’re ready to sell your house, seek the advice of a real estate professional. In some cases, you’ll need to adjust your expectations accordingly to meet the market where it is today. Selma Hepp, Interim Lead, Deputy Chief Economist at CoreLogic, explains what’s happening and what it means when you sell:

“Signs of a broader slowdown in the housing market are evident, . . . This is in line with our previous expectations and given the notable cooling of buyer demand due to higher mortgage rates. . . . Nevertheless, buyers still remain interested, which is keeping the market competitive — particularly for attractive homes that are properly priced.”

Bottom Line

While the housing market has cooled from its overheated frenzy, it’s still a sellers’ market. Let’s connect so you understand what’s happening with buyer demand and home prices in our local area as you get ready to enter the market.

Real Estate Market Pulse for the week of August 15, 2022. Episode 4! Is the real estate market stalling? Five of the last six recessions saw the housing market COOL, and only ONE RECESSION where housing actually crashed – 2008. The market appears to be STALLING with modest losses. Will we see a market crash? Think again.

The Market Pulse where you get what happened last week, what’s going on in the National housing market, the national economic notes of the week, the inverted yield curve watch, the market update for my Southern Nevada neighbors, this weeks predictions, some real estate headlines, and the ever important FED Watch, yes FED, we are watching WHAT YOU DO and NOT WHAT YOU SAY.

According to a recent survey from the Wall Street Journal, the percentage of economists who believe we’ll see a recession in the next 12 months is growing. When surveyed in July 2021, only 12% of economists consulted thought there’d be a recession by now. But this July, when polled, 49% believe we will see a recession in the coming 12 months.

And as more recession talk fills the air, one concern many people have is: should I delay my homeownership plans if there’s a recession? 

Here’s a look at historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession would mean for the housing market today.

A Recession Doesn’t Mean Falling Home Prices

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at the recessions going all the way back to 1980, home prices appreciated in four of the last six recessions. So, historically, when the economy slows down, it doesn’t mean home values will fall.

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would repeat what happened then. But this housing market isn’t about to crash. The fundamentals are very different today than they were in 2008. So, don’t assume we’re heading down the same path.

A Recession Means Falling Mortgage Rates

Research also helps paint the picture of how a recession could impact the cost of financing a home. As the chart below shows, historically, each time the economy slowed down, mortgage rates decreased.

Fortune explains that mortgage rates typically fall during an economic slowdown:

“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from and find comfort in the historical data.

Bottom Line

There’s no doubt everyone remembers what happened in the housing market in 2008. But you don’t need to fear the word recession if you’re planning to buy or sell a home. According to historical data, in most recessions, home price gains have stayed strong, and mortgage rates have declined.

If you’re thinking about buying or selling a home, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.

When the pandemic hit in 2020, many experts thought the housing market would crash. They feared job loss and economic uncertainty would lead to a wave of foreclosures similar to when the housing bubble burst over a decade ago. Thankfully, the forbearance program changed that. It provided much-needed relief for homeowners so a foreclosure crisis wouldn’t happen again. Here’s why forbearance worked.

Forbearance enabled nearly five million homeowners to get back on their feet in a time when having the security and protection of a home was more important than ever. Those in need were able to work with their banks and lenders to stay in their homes rather than go into foreclosure. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), notes:

“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.” 

As the graph below shows, with modification, deferral, and workout options in place, four out of every five homeowners in forbearance are either paid in full or are exiting with a plan. They’re able to stay in their homes.

What does this mean for the housing market?

Since so many people can stay in their homes and work out alternative options, there won’t be a wave of foreclosures coming to the market. And while rising slightly since the foreclosure moratorium was lifted this year, foreclosures today are still nowhere near the levels seen in the housing crisis.

Forbearance wasn’t the only game changer, either. Lending standards have improved significantly since the housing bubble burst, and that’s one more thing keeping foreclosure filings low. Today’s borrowers are much more qualified to pay their home loans.

And while the majority of homeowners are exiting the forbearance program with a plan, for those who still need to make a change due to financial hardship or other challenges, today’s record-level of equity is giving them the opportunity to sell their houses and avoid foreclosure altogether. Homeowners have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Thanks to their equity and the current undersupply of homes on the market, homeowners can sell their houses, make a move, and not have to go through the foreclosure process that led to the housing market crash in 2008.

Thomas LaSalvia, Chief Economist with Moody’s Analytics, states:

“There’s some excess savings out there, over 2 trillion worth. . . . There are people that have ownership of those homes right now, that even in a downturn, they’d still likely be able to pay that mortgage and won’t have to hand over keys. And there won’t be a lot of those distressed sales that happened in the 2008 crisis.”

Bottom Line

The forbearance program was a game changer for homeowners in need. It’s one of the big reasons why we won’t see a wave of foreclosures coming to the market.

State of the Real Estate Market Update July 21

Hey, Jordan Dove here.. I wanted to thank you for supporting my business.  Because of you, we have been able to grow year-over-year, helping hundreds of people, families, service members, and more, and I am extremely grateful for your support.  I believe real estate is the number one key for generational wealth, and can be passed down to heirs tax free – without probate – through a trust.

As your real estate professional, I want to give you an update on what is going on in our local Southern Nevada real estate market.  The market is shifting, and it’s shifting fast.

It’s actually shifting faster towards a buyers market than any point in recorded united states real estate history, and I’ve had conversations with people who have been in the business for decades – and they concur. 

One of the biggest reasons why we had an absolute boom, with home prices appreciating at unprecedented numbers was due to the extremely low inventory and low interest rates or cheap money, which created a bidding frenzy.  One of the biggest factors in that price appreciation was wall street hedge funds, private equity & foreign investment syndicates.

Up until the overnight mortgage rate hike that essentially doubled mortgage rates happened in June,, hedgies were purchasing single family residential homes up to $500,000, in cash, and paying higher than comparable sales.. This essential “set the market” and traditional buyers were competing against these buyers and these recorded sales.

Blackstone ALONE had a $20 BILLION DOLLAR real estate fund which drove this last boom. But guess what, they just raised ANOTHER $30 BILLION DOLAR FUND, and they will be holding onto this to create another crazy cycle one the dust settles, rates come back down, and they will take an even larger market share and turn those into rentals.  Wall Street owns 25% of all apartments and 15% of all residential real estate. Their goal is to monopolize residential real estate, push out first time homebuyers so they are renters forever – eliminating the opportunity to build wealth – and play residential real estate like a stock market. Up 20%, down 20% then pump it back up again, which they will do after this next price correction. The good news is, we know what their game-plan is and we can adapt accordingly. 

Fast forward to about a month ago, and the hedgies with virtually unlimited funds changed their buying parameters to up to $400,000 purchase price of single family homes. 

As the rates went up, that $482,000 median price became unaffordable for most Buyers. 

For example, a $500,000 purchase price with 5% down at today’s rate of 5.75% is an estimated monthly payment of Principle, Interest, Taxes, insurance and private mortgage insurance is just north of $3,500 per month.

For context, at a 3% interest rate, that payment is just north of $2,700, a difference of $800 per month on the same priced home. 

So with the hedge funds in a price discovery mode, changing their buying parameters, and with home sellers using those sold homes as comparables – when rates were much lower and affordable – this is causing massive price reductions across active listings.

The month of June saw a slight decline in the median price after the record setting month of May. The median price dropped $2,000 in June to $480,000.  Albeit very modest, we are waiting for the July numbers to come out because we will see a better trend of where the market is heading.

Not to mention that the United States GDP has two consecutive quarters of negative growth, inverted yield curves – meaning the 2 year treasury bond yield is HIGHER than the 10 year bond yield, are signs we are currently in and have been in a recession.  It is my belief that things are going to get rocky for a bit.

But don’t worry, there are some things you can do the prepare for this changing environment: 

#1) If you are considering selling your home – DO NOT WAIT. I believe we will continue to see price reductions in the LAs Vegas market and a lowering median price.  It is my opinion that interest rates will continue to rise, as the Fed is expected to hike rates another 75 basis points next week.  We are at extremely high levels of home prices, and many homeowners are sitting on a ton of equity – which is the majority of wealth for Americans.  Now, Homes are sitting on the market longer and those days of multiple offers and homes selling in a day or two are gone. We are moving back to a more normal market. We have had clients cash out and sit on the side lines by renting for a year or two to see where things go.  We have also had clients cash out and downsize or upsize, and using the proceed to Buy down rates.

#2) If you are considering Buying – there are going to be many opportunities.  I am advising my clients to. Begin asking for concessions from Sellers – who are now becoming more motivated to sell their properties and learning that the greatest sellers market in history is over.  One strategy that can be implanted is a Seller Buy Back – in which I can negotiate several thousands or even tens of thousands of dollars for you to use to buy down your interest rate to make payments more affordable, and/or use that for closing costs. 

To piggy back on that a bit, I want to explain something.. Experts are predicting a more normal appreciation of homes in the low to mid single digits.  The average price appreciation of a home is 3-5% per year, and they are expecting to see those levels return very quickly. 

#3) If you are falling behind on payments or know somebody who is struggling to meet ends meet, the good news is … unlike 2008, many homeowners now have much more skin in the game and equity.  You can sell your home on the open market and in most cases be able to walk away with much more money than you could in a short-sale or foreclosure sale.  I would not recommend not paying your mortgage for a year or so and trying to quote live for free unquote but rather cash out your equity so you can get ahead financially. 

Remember, you only lose if you sell your property at a loss. You have to live somewhere, and if you stay in your home long term, historically, real estate has ALWAYS appreciated over the long term.

Here is an example of how purchasing at a higher price with lower rates results in a lower payment versus purchasing at a lower price with higher rates, and why basing your decisions off of payment is better than making the decisions based on price:

Let’s take the median price of a home of June at $480,000 — The average homeowner puts 5% down conventional financing – With a Seller buy back, let’s say you are able to buy down you rate to 3.5% at no cost to YOU – this results in a payment of approximately $2,783 including PITI and PMI. If you put 20% down or have at least 20% equity in your home, you can get rid of your private mortgage insurance, which would save you between two and three hundred dollars per month. 

Now, if we take that same price of $480,000, and let’s say there is a 10% market correction, bringing the price of the home down to $432,000, but with higher interest rates, and I believe they will be steady in the 6s soon, so let’s say 6 and a quarter, that payment is almost $3,200, a difference of $400 per month. If prices do correct just 10%, which is HALF of what they appreciated in 2021 alone, sellers will NOT be offering large concessions, you can see how purchasing at a higher price is a better result in terms of monthly payment.

So if you plan on staying in the property for several years, that may be a better option for you.  It’s better to look at monthly payments LONG TERM versus price of home.  

So there are a few options:

If you are comfortable with where you are at, in terms of payments, and are not looking to cash out your equity, that is great. Stay put. I believe there is going to be some opportunities on the horizon, so I’d recommend to keep that credit clean, minimize debt, live a bit more frugally through this recession and look for some opportunities in the future.  You want to keep your powder dry because you will not want to miss out on these opportunities. 

If you are looking to cash out your equity and sit on the sidelines, do not wait, because it’s going to get very difficult to sell properties at these levels very soon, and the price levels have  already decreased. The peak of this cycle was May.

If you’re looking to cash out and upsize or downsize, there are many more opportunities then there were just a couple of months ago, and we can negotiate with the Seller to buy down your interest rates.

This is not a time to panic.. Once inflations starts to come down, and that could be in months, that could be in a year, we don’t know, but once inflation does start to come down, we will see rates start to come down.. And if the market does correct, and rates do come down where homes are much more affordable in terms of monthly payments, that will be the time to take advantage of the opportunities, and I will make sure you are informed.  

I sent out a Monday Market Pulse e-mail to all of my clients, so I hope you receive it.   You can also signup for the substack newsletter at jordandove.substack.com

If I can be of help to you or anybody who might be in the market to make a move soon, please send me their contact information.  Your referrals are greatly appreciated. 

If you have any questions for me, you can call me, text me, e-mail me, whatever.  I will do my very best to respond as promptly as possible, and if there is something I do not know, I will find somebody who can get that answer for you. 

Take care & be well.  

What 10 U.S. Housing Markets are cooling down the fastest? A strategy to sell your home in a shifting selling market that nets you more money & Wall Street leads the way with home escrow cancellations.