Homebuyers continue to stay active
The housing market is experiencing a slower pace, it is no more a frenzy like the unicorn years, however, that doesn’t mean today’s market is at a cessation. In actuality, buyer traffic is still strong today. Maybe it’s not running but it surely is brisk walking.
The ShowingTime mentions that “Showing traffic declined about 10% in May, according to the latest data from the ShowingTime Showing Index®. This follows a typical seasonal pattern – disrupted by the pandemic but now beginning to return – which shows traffic peaks in spring and declines through the rest of the year.
Despite the monthly decline, buyer foot traffic remains elevated above pre-pandemic levels associated with a more typical housing market. Buyers continued to outnumber sellers last month, leading to the strongest monthly price growth since last June – even as sales activity remained muted. The index overall was 46% and 66% higher in May than in the same period in 2018 and 2019, respectively, and up 5.2% from May of last year.”
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 is evident from the graph that there’s seasonality in real estate. If you look at the pre-pandemic years in the market (shown in gray), there is 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.
With the onset of the pandemic in March 2020, that trend was disrupted by the uncertainty in the market (shown in blue in the middle). It is expected to behave in an unprecedented manner. The slowdown that it experienced showed the path to ‘unicorn’ years of housing (shown in pink). This is when mortgage rates were record-low and buyer demand was sky-high. We still can understand that the seasonal trends still existed even during that time, just at much higher levels.
Now, we have entered 2023. Traffic is down from the previous unicorn years because of inflation, recession, and other collateral factors. But what’s happening isn’t a steep drop off in demand – it’s a slow return toward more normal seasonality. We also need to notice that the graph shows higher traffic than in the pre-pandemic years.
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 it mean for you as a Buyer/ Seller?
Even if you are waiting for a market correction, other buyers are already touring homes. For sellers, you are losing or delaying the opportunity of listing your house in the market at the right time. The buyer activity level is higher than they were in May 2022 (when the news of higher mortgage rates started to set in) and certainly more than they were in the last normal years. Thus, there is no dearth of buying activities and it is only 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 let your sight get overcast with all negative news. For sellers, 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. For buyers, if you are still not looking for you are losing the opportunity to get one of the best deals. Connect with a real estate agent to start the process.