The Housing Market: A Grocery Store with Shelves Finally Getting Restocked

Imagine the housing market as a grocery store. For the past few years, it’s been like a stereotypical Soviet supermarket – depressing and understocked. But lately, something has started to change. The shelves are finally getting restocked.

According to Realtor.com Senior Economist Ralph McLaughlin, "What we’re seeing is the supermarket shelves are starting to get restocked. They’re not fully stocked like they were before the pandemic, but they’re on their way." This is good news, but the market is actually complicated. So far, 2024 has hardly been a boom time.

To better understand what’s going on, Intel spoke to economists and polled hundreds of agents and brokerage leaders in late June as part of the Inman Intel Index survey. The takeaway from these efforts is something of a two-edged sword: On the one hand, there’s more inventory on the market now than there was a year ago. But on the other, inventory is still far below pre-pandemic levels and demand remains suppressed.

Inventory is Improving

Experts who spoke to Intel for this story agreed that overall inventory is improving.

• Redfin Chief Economist Daryl Fairweather recently told Intel that "inventory is the highest it’s been this time of year in at least the last four years." She added that "we’re around three months of inventory."
• McLaughlin said that inventory has improved most significantly in the South, where homebuilding has been strongest. "The supermarkets there are close to fully stocked compared to pre-pandemic levels, and their inventory is fairly priced," he said.
• Altos Research founder and President Mike Simonsen told Intel that "available inventory of unsold homes is climbing pretty much everywhere across the country. Every state has more inventory now than last year at this time."

The numbers bear this out, with data showing active listings steadily climbing.

But Where’s the Revenue?

Looking just at months of inventory or active listings might give the impression that after years of sluggishness, the U.S. housing market has come roaring back to life. The proverbial supermarket appears to be restocked and ready to go. But anyone working in real estate knows it’s not that simple. And part of what’s going on has to do with why active listings are actually on the rise.

• Fairweather explained that new listings are up compared to 2023, but "only by 10 percent." They’re also still lower than they were in 2021 and 2022. In other words, inventory isn’t rising because a lot of new homes are hitting the market. "It’s more that the homes that are hitting the market are staying on the market longer and we’re seeing them starting to sell for under list price," Fairweather explained.
• Simonsen added that "as mortgage rates moved higher, that has led to a demand slowdown that allows inventory to build." He also noted that other factors tamping down demand include fewer people changing jobs and thus relocating, and fewer new jobs being created.

What Are Agents and Brokers Doing About It?

Respondents to Inman Intel Index survey in June do seem to be feeling the effects of a market that continues to struggle with a balance of supply and demand.

• Among agent respondents to the survey, 27 percent said their pipelines are "substantially lighter" than they were one year ago. Another 30 percent described pipelines as being merely "lighter" — meaning well over half of agents have experienced a weakening pipeline over the last year.
• In total, 24 percent of agent respondents pointed to lack of inventory as their top concern right now. That tied with commission compression for the second largest concern among agents. Mortgage rates — which have a strong relationship to inventory — were the most common top concern, garnering 29 percent of agent responses.

The point is that agents are feeling the challenges — high rates, low demand, and still-low inventory — that are baked into the current market. And the survey shows that the most common response appears to be agents doubling down on their spheres:

• More than a quarter of agent respondents to the survey, or 28 percent, indicated that "almost all" of their recent listings came from repeat clients. That eclipsed all other responses to the question.
• Another 15 percent indicated that more than 75 percent of their listings came from repeat clients, while 23 percent revealed that between half and three quarters of their listings came from returning customers. All together, that means nearly two-thirds of agents are getting half or more of their listings from repeat clients.

Conclusion

The housing market is finally starting to get restocked, but it’s still a complex and challenging environment. Agents and brokers are adapting by doubling down on their spheres and focusing on building relationships with repeat clients. While inventory is improving, demand remains suppressed, and the market is still far from fully restocked. As the situation continues to evolve, it’s essential to stay informed and adjust strategies accordingly.

FAQs

Q: What is the current state of the housing market?
A: The housing market is slowly improving, with inventory levels increasing and demand remaining suppressed.

Q: Why is inventory increasing?
A: Inventory is increasing due to a combination of factors, including rising mortgage rates, fewer people changing jobs, and fewer new jobs being created.

Q: What are agents and brokers doing to adapt to the market?
A: Agents and brokers are doubling down on their spheres, focusing on building relationships with repeat clients, and adapting their strategies to the current market conditions.

Q: What is the future of the housing market looking like?
A: While it’s difficult to predict the future, experts believe that the housing market will continue to evolve and adapt to changing market conditions. It’s essential to stay informed and adjust strategies accordingly.

Q: How can I stay informed about the housing market?
A: Stay up-to-date with industry reports, surveys, and news to stay informed about the current state of the housing market.

Author: www.inman.com

Orginal Source link