Today’s Real Estate Market: The ‘Unicorns’ Have Galloped Off

<article class="post-703735 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-703735"><span class="entry-date">May 30, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Today’s Real Estate Market: The ‘Unicorns’ Have Galloped Off</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Today%E2%80%99s+Real+Estate+Market%3A+The+%E2%80%98Unicorns%E2%80%99+Have+Galloped+Off&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Ftodays-real-estate-market-the-unicorns-have-galloped-off%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Today’s Real Estate Market: The ‘Unicorns’ Have Galloped Off Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230530-todays-real-estate-market-the-unicorns-have-galloped-off.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>Comparing real estate metrics from one year to another can be challenging in a normal housing market. That’s due to possible variability in the market making the comparison less meaningful or accurate. Unpredictable events can have a significant impact on the circumstances and outcomes being compared. </p>
<p>Comparing this year’s numbers to the two ‘unicorn’ years we just experienced is almost worthless. By ‘unicorn,’ this is the less common <a href="https://www.thefreedictionary.com/unicorn" rel="noopener noreferrer" style="color: blue;" target="_blank">definition</a> of the word:</p>
<blockquote><p><em>“Something that is greatly desired but difficult or impossible to find.”</em> </p></blockquote>
<p>The pandemic profoundly changed real estate over the last few years. The demand for a home of our own skyrocketed, and people needed a home office and big backyard. </p>
<ul>
<li>Waves of first-time and second-home buyers entered the market.</li>
<li>Already low mortgage rates were driven to historic lows. </li>
<li>The forbearance plan all but eliminated foreclosures.</li>
<li>Home values reached appreciation levels never seen before.</li>
</ul>
<p>It was a market that forever had been “<em>greatly desired but difficult or impossible to find.” </em>A ‘unicorn’ year.</p>
<p>Now, things are getting back to normal. The ‘unicorns’ have galloped off. </p>
<p>Comparing today’s market to those years makes no sense. Here are three examples: </p>
<h4><strong>Buyer Demand </strong></h4>
<p>If you look at the headlines, you’d think there aren’t any buyers out there. We still sell over 10,000 houses a day in the United States. Of course, buyer demand is down from the two ‘unicorn’ years. But, according to <a href="https://www.showingtime.com/showingtime-showing-index/" rel="noopener noreferrer" style="color: blue;" target="_blank"><em>ShowingTime</em></a>, if we compare it to normal years (2017-2019), we can see that buyer activity is still strong (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-showing-traffic-above-pre-unicorn-years.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-showing-traffic-above-pre-unicorn-years.png"/></a></p>
<h4><strong>Home Prices</strong></h4>
<p>We can’t compare today’s home price increases to the last couple of years. According to <a href="https://www.freddiemac.com/research/indices/house-price-index" rel="noopener noreferrer" style="color: blue;" target="_blank"><em>Freddie Mac</em></a>, 2020 and 2021 each had historic appreciation numbers. Here’s a graph also showing the more normal years (2017-2019):</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-percent-of-annual-home-appreciation-returning-to-more-normal-pre-unicorn-years.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-percent-of-annual-home-appreciation-returning-to-more-normal-pre-unicorn-years.png"/></a></p>
<p>We can see that we’re returning to more normal home value increases. There were several months of minimal depreciation in the second half of 2022. However, according to <a href="https://www.fanniemae.com/research-and-insights/surveys-indices/fannie-mae-home-price-index" rel="noopener noreferrer" style="color: blue;" target="_blank"><em>Fannie Mae</em></a>, the market has returned to more normal appreciation in the first quarter of this year.</p>
<h4><strong>Foreclosures </strong></h4>
<p>There have already been some startling headlines about the percentage increases in foreclosure filings. Of course, the percentages will be up. They are increases over historically low foreclosure rates. Here’s a graph with information from <a href="https://www.attomdata.com/news/category/market-trends/foreclosures/" rel="noopener noreferrer" style="color: blue;" target="_blank"><em>ATTOM</em></a>, a property data provider:</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-1m-fewer-foreclosures-during-unicorn-years.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230529/20230530-1m-fewer-foreclosures-during-unicorn-years.png"/></a></p>
<p>There will be <a href="https://www.simplifyingthemarket.com/2023/04/27/why-todays-foreclosure-numbers-are-nothing-like-2008/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">an increase</a> over the numbers of the last three years now that the moratorium on foreclosures has ended. There are homeowners who lose their home to foreclosure every year, and it’s heartbreaking for those families. But, if we put the current numbers into perspective, we’ll realize that we’re actually going back to the normal filings from 2017-2019.</p>
<h3>SBottom Line</h3>
<p>There will be very unsettling headlines around the housing market this year. Most will come from inappropriate comparisons to the ‘unicorn’ years. A real estate professional is a great resource to help you keep everything in proper perspective.</p>
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