Unseen Housing Crisis: Skyrocketing Prices despite Rising Supply!

In this detailed report by Irving Wilkinson for AlphaBetaStock.com, America’s property market is examined, revealing a perplexing trend – supply returns while demand depreciates. With median pricing for existing homes like condos and co-ops witnessing a significant drop, Richter investigates this adverse event of “lower highs,” which hasn’t been observed since the Housing Bust. The fluctuations in the market are studied, accounting for seasonal variations and pandemic impacts, presenting a comprehensive picture of America’s real estate landscape.

Key Points

1. The national median price of existing homes dropped to $391,800 in October, down by 5.1% from the peak in June 2022. This is the first “lower highs” occurrence in prices since the Housing Bust. Despite a seasonal uptick, prices fell in October from September this year.

2. Sales of previously owned houses, condos, and co-ops in October dropped to levels not witnessed since the worst three months of the housing bust. Compared to prior Octobers, sales have significantly decreased from -14.6% (2022) to -38.8% (2021).

3. Supply has increased to 3.6 months, the highest rate since June 2020. On the other hand, active listings increased by 5% to 737,480 homes, a high increase for October. The median days on the market rose to 50 days in October, reflecting the aggressiveness of sellers pulling their listings off the market.

Slipping Prices and Sluggish Demand: A Peek into the Current Real Estate Market

The real estate market is experiencing a curious, perhaps unexpected phenomenon. Supply is coming back, but it seems like demand is a no-show. With prices still skirting the stratosphere, the market dynamics beg closer scrutiny.

According to fresh data from the National Association of Realtors (NAR) today, the national median price of existing homes fell. That includes all types of homes – single-family houses, condos, and co-ops. In October, final sales figures revealed a median price of $391,800, indicating a 5.1% drop from the peak in June 2022.

A Hazy Horizon: The Tale of Waning Home Prices

Sales have scarcely been as lackluster since the housing bust. The NAR recorded the first “lower high” since that era. The median price in June 2023, typically a peak period, was lower than the all-time high observed a year earlier. It’s noteworthy to highlight that prices have retreated further since then.

Last October, prices fell from September, breaking away from both this year’s and prior years’ trend of a flat-spot or mild surge. Adding a twist to the story, prices embarked on a freefall last year, blatantly departing from the established seasonal pattern. This spontaneous price plummet, from July through December increased the median price by 3.4% year-over-year.

Unveiling the Worrying State of Sales

The hammer has hit hard on the sales of previously owned dwellings. Statistics divulge an alarming slump to 3.79 million homes in October, shockingly reminiscent of the worst days of the housing bust. The depression in sales rivals the figures from post-Lehman-bankruptcy November in 2008, and the summer cooler months of July and August 2010.

Ponder over these downturn percentages compared to prior Octobers:

  • 2022: -14.6% from already crashed sales
  • 2021: -38.8%
  • 2019: -26.8%
  • 2018: -29.9%

Skimming the surface further, actual sales – not the polished, seasonally adjusted annual rate – receded by 10.2% from the already depressed levels in October 2022 to 333,000 homes.

Zooming In on Regional Sales and Price Reductions

The sales volume crumbled while supply swelled to 3.6 months, the highest since June 2020, with 1.15 million residences for sale. Regional year-over-year sales have taken a hit from last year’s low. Much to the delight of bargain hunters but to the dismay of sellers, price reductions in October surpassed the pre-pandemic highs, with 37.6% of active listings lowering their asking price.

A Method to the Madness?

Observers noted an unusual 5% jump in active listings in the month to 737,480 homes. Against the mill October trends, this spike was a surprise. Changes in listings often provide critical insight into the market’s pulse; the spike could well be a desperate scramble by sellers in a scenario where buyers have vaporized at prevailing prices and sales volumes have hit rock bottom.

What can investors make of this intertwined saga of falling prices, disappearing demand, and surging supply? The potential opportunities lie within the challenge. Given the lower prices, investors with a long-term perspective may consider diving in and snapping up properties now. Real estate, despite its ebbs and flows, has proven to be a formidable wealth-building strategy in the face of a volatile market.

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