The Slowing Housing Market: Seasonal Cool-Down Or A Market Correction?

We’re hearing it from agents across the country – the slowing of the housing market seems all too real. And, nationwide statistics seem to validate the anecdotal evidence.

But, because all markets are local, it’s currently only happening in pockets across the country.

Economists predict the future of the housing market using economic factors. Real estate professionals, however, because you are the “boots on the ground,” have other and better evidence to consider.

Let’s take a look at some of what we’ve been hearing and reading about and then you can decide for yourself.

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Decline in home prices

The big news is that home prices are tumbling across the globe, from the UK, to Australia, Delhi and Honolulu.

Despite some of the clearer signals of markets changing (such as higher inventories), home prices in the continental U.S. largely remain strong, at least according to the agents we’ve spoken with.

But, again, there are areas across the country where home prices are softening – meaning, they may still be on the rise, but not nearly at the pace to which we’ve become accustomed. Some markets have even experienced declines in average selling prices.

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In Texas, for instance, homes in the Dallas/Fort Worth area increased in price only 0.5 percent over the past year, while those in San Antonio have actually decreased 5.4 percent. In uber-popular Austin, home prices are down 3.4 percent, according to the Collin County Association of Realtors.

With the median sales price of a Manhattan apartment dropping 3 percent in the second quarter, Mansion Global’s Liz Lucking went so far as to deem the borough’s current market as a “buyer’s market.”

 

Traffic eases

Some agents have noticed a large decrease in open house attendance and home showings. Anecdotal evidence is fine, but we wanted some harder statistics so we turned to ShowingTime, a market stats and management tech provider.

Although the number of home showings in two of the four regions they study have increased slightly, the overall trend seems to indicate the housing market slowing down. In the West region, however, traffic through homes for sale has fallen, even during the so-called “hot” spring selling season.

This represents the “fifth straight month of year-over-year declines” in the West, according to ShowingTime.

 

Days on the market increase

Agents in Las Vegas saw a rise in the number of listings without an offer climb in May and June, “the first two-consecutive-month climb since 2016,” according to the Las Vegas Review- Journal’s Eli Segall.

In Palo Alto, agents are also feeling a breeze through their market. Apparently, homes “tend to stay on the market longer” than they did last year, according to an agent interviewed by Palo Alto Weekly.

 

Housing market slowing down from fewer offers per home

“There’s a drastic change in the market for sellers,” claims Beata Miklos, a Seattle agent. “There aren’t as many bidding wars … there’s not as much urgency for buyers to place offers right now because they know it’s softening up.” Clearly buyers are at an advantage in this market, so it would

Although prices haven’t softened in the fiery Palo Alto market, as mentioned earlier, homes are sitting longer on the market and “the number of offers on a single property has generally declined,” an agent tells Palo Alto Online.

The Oregonian’s Elliot Njus tells the story of a Portland homeowner who recently received only two offers on his home. “There was no bidding war. No all-cash offers from developers … A year ago, the same house probably would’ve attracted a pile of offers, most of them over asking price.”

 

Price reductions

In June, real estate in King County, WA experienced its first price drop since before the recession, a Seattle agent tells King5 News.

The same holds true in Whatcom County, where 52 homeowners dropped their asking price over a 7-day period in June, according to a real estate agent in Bellingham, Washington. June, by the way, marks the peak of Bellingham’s real estate season.

The median price of a Manhattan, NY apartment has dropped for the fourth straight quarter, according to therealdeal.com’s Christain Bautista. Overall, Manhattan seems to be the market with the most change happening, and apparently, it’s been going on for more than a year.

“Fewer buyers are attending open houses, inventory is on the rise and it’s taking longer for homes to sell,” The Real Deal’s Kathryn Renzel reported last month.

 

Inventory increases

Trulia’s research wizzes say that second-quarter inventories of homes for sale swelled three times the rate of the inventory increase in the second quarter of 2017.

Now, these are nationwide statistics, but you’ll find the same thing happening in pockets around the country. The supply of homes for sale in New York and Los Angeles, for instance, has increased “1% and 2.9% respectively year-over-year,” according to Trulia’s Alexandra Lee.

Palo Alto homebuyers are seeing an 11 percent increase in homes for sale over this time last year.

Seattle buyers are also getting some relief as King County sees inventory jump 43 percent (in June) from the same time last year. Seattle Times business reporter Mike Rosenberg claims that this represents “the biggest increase since the housing bubble and burst a decade ago.”

Head south a couple of hours, to Portland, and you’ll find an inventory of more than 6,000 homes “the most the metro area has seen since 2014,” according to Njus.

“Thirty of the nation’s 100 largest metros posted annual inventory increases in the second quarter,” according to a July report from Trulia. Some of these metros experienced astounding rebounds in inventory.

Nashville’s for instance, increased 52 percent and Salt Lake City saw a nearly 50 percent increase in inventory. Even the red-hot San Diego area’s inventory grew 22 percent over what they had at this time last year.

Do these nationwide changes foreshadow a changing housing market or can we chalk them up to seasonal cool-down? After all, sales typically pick up again in September.

Only time will tell.

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