Why Today’s Housing Inventory Shows a Crash Isn’t on the Horizon
You might remember the housing crash in 2008, even if you didn’t own a home at the time. If you’re worried there’s going to be a repeat of what happened back then, there’s good news – the housing market now is different from 2008. That is Why Todays’ Housing Inventory Shows a Crash Isn’t on the Horizon.
One important reason is there aren’t enough homes for sale. That means there’s an undersupply, not an oversupply like the last time. For the market to crash, there would have to be too many houses for sale, but the data doesn’t show that happening.
Housing supply comes from three main sources:
- Homeowners deciding to sell their houses
- Newly built homes
- Distressed properties (foreclosures or short sales)
Here’s a closer look at today’s housing inventory to understand why this isn’t like 2008.
Homeowners Deciding To Sell Their Houses
Although housing supply did grow compared to last year, it’s still low. The current months’ supply is below the norm. The graph below shows this more clearly. If you look at the latest data (shown in green), compared to 2008 (shown in red), there’s only about a third of that available inventory today.
So, what does this mean? There just aren’t enough homes available to make home values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not happening right now.
Newly Built Homes
People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. The graph below shows the number of new houses built over the last 52 years:
The 14 years of underbuilding (shown in red) is a big part of the reason why inventory is so low today. Basically, builders haven’t been building enough homes for years now and that’s created a significant deficit in supply.
While the final blue bar on the graph shows that’s ramping up and is on pace to hit the long-term average again, it won’t suddenly create an oversupply. That’s because there’s too much of a gap to make up. Plus, builders are being intentional about not overbuilding homes like they did during the bubble.
Distressed Properties (Foreclosures and Short Sales)
The last place inventory can come from is distressed properties, including short sales and foreclosures. Back during the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford.
Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from the Federal Reserve to show how things have changed since the housing crash:
This graph illustrates, as lending standards got tighter and buyers were more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures and the forbearance program helped prevent a repeat of the wave of foreclosures we saw back around 2008.
The forbearance program was a game changer, giving homeowners options for things like loan deferrals and modifications they didn’t have before. And data on the success of that program shows four out of every five homeowners coming out of forbearance are either paid in full or have worked out a repayment plan to avoid foreclosure. These are a few of the biggest reasons there won’t be a wave of foreclosures coming to the market.
What This Means for You
Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. According to Bankrate, that isn’t going to change anytime soon, especially considering buyer demand is still strong:
“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”
The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing inventory tells us there’s no crash on the horizon.
If you want to know more about the real estate market in your neighborhood, or condominium building, I can set up a search for you so you are notified of New Listings, Homes Under Contract, and those that have Sold! Feel free to call, text or you can reach me at Thom (at) MyMidtownMojo.com
Homebuyers Are Still More Active Than Usual
Even though the housing market is no longer experiencing the frenzy that was so characteristic of the last couple of years, it doesn’t mean today’s market is at a standstill. In actuality, buyer traffic is still strong today. Homebuyers are still more active than usual!
The ShowingTime Showing Index is a measure of how much buyers are touring homes. The graph below uses that index to illustrate buyer activity trends over time to help put today into the proper perspective.
It shows there’s seasonality in real estate. If you look at the last normal years in the market (shown in gray), there was a consistent pattern as buyer activity peaked in the first half of each year (during the peak homebuying season in the spring) and slowed as each year came to a close.
When the pandemic hit in March of 2020, that trend was disrupted as the market responded to the resulting uncertainty (shown in blue in the middle). From there, we entered the ‘unicorn’ years of housing (shown in pink). This is when mortgage rates were record-low and buyer demand was sky high. Similar seasonal trends still existed even during that time, just at much higher levels.
Now, let’s look at 2023. Traffic is down from the previous month and it’s also lower than the peaks we saw in the ‘unicorn’ years. But what’s happening isn’t a steep drop off in demand – it’s a slow return toward more normal seasonality. As the ShowingTime report explains:
“Showing traffic declined about 10% in May . . . This follows a typical seasonal pattern – disrupted by the pandemic but now beginning to return . . .”
And, to highlight this isn’t a drastic decline, let’s zoom in. Here’s a graph using just the May data for the last five years. It shows just how strong buyer demand still is.
What Does That Mean for You?
Buyers are still out there touring homes. They’re more active than they were in May 2022 (when sticker shock over higher mortgage rates started to set in) and certainly more than they were in the last normal years. So, remember, buyer activity is still strong. And it could actually be even stronger if it wasn’t constrained by the limited supply of homes for sale. According to U.S. News:
“Housing markets have cooled slightly, but demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.”
Don’t lose sight of just how active the market still is today. If your house isn’t on the market, it’s not getting in front of all those buyers who are looking to make a purchase right now. Let’s connect to start the process.
AWESOME! You’ve decided to sell your Midtown Atlanta condo! The market is on the move, and you may have a contract quicker than you think! But, there are some things to consider when selling your Midtown Atlanta Condo!
Seller Tips for Midtown Atlanta Real Estate
When we sign our listing agreement with you to begin marketing your home, the agreement has a checkbox that indicates that your Listing Agent has shared with you the Georgia Association of REALTOR’s Protect Yourself When Selling A House (or Condo). That publication is the basis for these posts.
Please keep in mind that not all of these tips may pertain to you or your particular selling situation.
Setting The Sales Price
Price it right…and they will come! Midtown Condos can be under contract in the matter of a day, if priced right. But if you overprice your home….it will just be sitting there. Agents look at prices and if a home is overpriced, they will often choose not to even show it. Listen to your real estate agent and their pricing strategy! You may also want to have your home or condo appraised before you even list it.
Disclose, Disclose, Disclose
“Sellers have a duty to disclose latent or hidden defects in their properties that are not readily apparent from a reasonable inspection of the property.” In a condominium, you are not responsible for the common areas, unless an assessment has been passed to address an issue or situation. But inside your condo, you need to disclose things such as if you’ve done any remodeling, etc. When we list your condo, we will provide you with a Condominium Seller’s Disclosure Statement to complete. There is also the mistaken idea that you can avoid disclosure obligations by selling your condo “as-is.” Known defects still need to be disclosed.
This is when you have to no longer think of your condo as your “home,” but a piece of property you need/want to sell. At first that sounds harsh, but what it really means is you want to make your house (condo) inviting for prospective Buyers! You want them to look around, even sit on your furniture so the can say ” Yes, I could see myself living here!”
To do this, you need to declutter and make your home inviting. Remove (consider a storage place short term) all those photos and personal items. A photo or two is fine, but I’ve been in a condo where there was a wall of pictures. The Buyer’s spent more time looking at the pictures than they did the condo!
This is also the time you want to secure and protect valuables like prescription drugs, checkbooks, jewelry and such. I’ve shown homes where bank statements with account numbers were just laying on the desk….not good!
Your home should NEVER be shown with out a real estate agent being present! Either I as your Listing Agent would be there (for an Open house) or the Buyer would be with their agent. They will gain access by using a special key to open the lockbox.
Have Important Information Ready For Buyers
With today’s technology, we can have many documents related to the sale of your home in the MLS and attached to your listing. This can include the Seller’s Property Disclosure Statement, Utility Information and HOA disclosures. This way, as an agent prepares to show your home, they can either review these documents or at least have access to them to answer questions from the Buyer. If the agent is using an iPad, they can open these right while you are viewing the condo!
However, some home owners and agents prefer to have a Home Book in the home. This contains the items noted above, and they are there for the buyer and agent to review while they are looking at your home. Depending on if you are selling a single family home or a condominium will dictate which way you want to provide this information as well as what you may need to provide.
In our next segment, we’ll review real estate contracts, keeping copies of everything, what can happen while your home is Under Contract and how to address issues that buyers may have with your home or condo.
Selling your Midtown Atlanta condo or home need not be a stressful time. Mind you, things may happen along the way that cause that stress level to go up for all the parties involved. But if you have the right people on your team, it should be easy.
In my previous articles, I’ve covered disclosures and sales price to buyer information and written contracts. Let’s look at a few more items for you to consider as you list and sell your Midtown Atlanta condo or single family home.
Seller Tips For Midtown Atlanta Real Estate
Addressing Buyer Concerns Quickly
Buyer concerns will most likely come up as the result of a home inspection, but there can be other items of concern. In selling your Midtown Atlanta condo, you will complete a Community Association Disclosure Exhibit. This outlines what is covered in the monthly HOA fee, as well as potential assessments. If your HOA recently passed a special assessment and you ask the Buyer to pay this, you might have a “bump in the road.”
You might consider a pre-inspection before you list your home or condo for sale. This way, you can discover potential problems and address them before a buyer sees them. In a condo, there is not nearly as much to consider, depending on the age of the condo. Items you could have checked are the hot water heater and the heating/ac system.
A home in great shape will sell quicker, and usually much closer to it’s listing price…if priced right of course!
Fair Housing — What you CAN’T Do!
If I’m your listing agent, and I bring you an offer, don’t ask me the race of the buyer! In fact, neither you nor I can discriminate on the basis of race, color, religion, national origin, sex, disability or familial status. As a real estate agent, I have a commitment and an obligation to provide equal housing opportunities.
Violating fair housing laws carries stiff financial penalties….something neither of us will be paying!
“Oh, he’s the sweetest little thing and won’t bother anyone.” Ever been cornered in a house with that sweet little dog that wanted to take a leg off? Well, you don’t want to find out, and you certainly do not want a buyer or their agent to find out either!
Pets should be removed from the home during showings, and if not removed, then crated. You don’t even want to lock them in a room, as someone still might open a door. Also know that a Buyer that is allergic to animals will quickly note the presence of an animal, and may not even look at your home further.
Choosing Your Real Estate Agent
Some agents are members of the National Association of REALTORS…and some are not. Some will tell you that if you select an agent that is NOT a REALTOR, you will be getting less than the best. NOTHING could be further from the truth. You should be most concerned with your agent’s knowledge of the market and neighborhood where you live. Choose someone that sells in your area, and has knowledge about your unique selling situation…such as condominiums.
You might think it’s ok to hire Frank your Friend from the burbs, but do they know your area? Your building? How to access it and where everything is?
If you are here at MyMidtownMojo, then you know we know Midtown Atlanta condominiums!
When selling your Midtown Atlanta condo or single family home, you want to take all the necessary steps to get your home sold as quicly as possible and for the best possible price. And these tips are just what you need.
In Part 1, we reviewed the sales price, disclosures, preparing your home for showings and providing important information to the buyers. Now let’s look at some other points to consider.
Seller Tips for Midtown Atlanta Real Estate
They could be on a bar napkin, but they have to be in writing! Now, you probably won’t sell your Midtown Atlanta condo off of a paper napkin, but I do want to stress the importance of the contract. In Georgia, purchase and sale agreements must be in writing to be enforceable. We don’t want any of that “he said, she said” stuff going on. There can be email exchanges back and forth that could possibily be enforced, but in the end, you want to have a written contract spelling out ALL the details of the sale.
Keep Your Copies
You should be given a copy of each and every document you sign as part of your sale. From your Listing Agreement to your Purchase contract to amendments and exhibits…if your name or initials are on it…you want a copy!
Just Because You Have a Contract
Oh how I wish I could simply say, once you have a signed contract, it’s smooth sailing. While many times it will be, there are many times it will NOT be smooth sailing. Most contracts will have contingencies that need to be met before the sale is finished. This can range from appraisals, to financing to addressing repairs to the property. In Georgia, buyers can ask for a due diligence period during which they conduct inspections, work on financing and just look around. During this time, the buyer may terminate the contract for any reason whatsoever! This is why you want to have as short of a due diligence period as you can reasonably negotiate.
Passing Title to the Property
The Purchase and Sale Agreement requires you to convey good and marketable title to the property at the time of closing. This means it is free of any liens, mortgages or title defects. As the Seller, you need to know that what you are going to “net” from the sale will be enough to cover paying off your mortgage, real estate fees and any of the closing costs you may have agreed to pay for the buyer. Your agent can provide you with a Seller’s Net Sheet that will help you see the money you will receive (or may have to bring) at the closing.
If you think you may not be able to have the funds needed, you may qualify to do a short sale. I’m happy to discuss this process with you and how it may be an option for you. You can learn more about short sales here.
In our last article, we’ll cover addressing buyer issues, fair housing laws, pets and choosing your real estate agent.
Here is a link to the first article of Seller Tips for Midtown Atlanta real estate.
Here is a link to Part 3 – Seller Tips for Midtown Atlanta real estate!