crash...? what crash??

crash...? what crash??
Hey gang so if you've been reading my emails for awhile now you probably gathered that I'm fairly bearish about the market and where I believe it's heading.

And I know there are a lot of buyers who are on the sidelines just waiting...

 

That being said, I've been reporting on some fairly dismal numbers these last several months and yet... the historically low inventory continues to prop up the market. 

At this point I feel like the phrase "historically low" is starting to lose it's meaning because we're using it so often.


 


You know, like if you say the word table over and over and over again... table




table

table







tay-ble












tuh-able
















taayyybulll




the word has lost all meaning





but here we are with even more historically low inventory: there were fewer homes for sale in May than any other month on record.

To put that into perspective, there are nearly 40% fewer homes for sale than pre-pandemic, which was already an extremely low inventory (currently about 550k houses for sale, pre-pandemic was roughly 1M).


 


Economists are somewhat split on when (or if) the housing recession will happen, but many who believe one is forthcoming predict it will happen in the latter part of the year.

 


My belief is that once inventory ticks up that could be the straw that breaks the camel's back and starts the downward spiral.

Here are the top 3 ways that inventory might start to increase:



foreclosures

There are over 50M mortgage holders in the US and foreclosures have been significantly increasing so far this year. they're up 7% from a month ago and 14% from a year ago

If only 1% of the total mortgaged houses were facing default we'd nearly double our current inventory.

shadow inventory

shadow inventory refers to any homes that are currently vacant. they could be 2nd homes, vacation homes, Airbnb/VRBO, bank owned (REO), probates, etc.

There are approximately 12M vacant homes  in the US right now. If only 5% of those came on the market we'd double our current inventory.

unemployment

unemployment was 3.7% in May, which is among the lowest it's been in the last 20 years. If that number increases there will be a much greater selling pressure for owners who have been hesitant to give up low interest rate loans.



summary

although I continue to be bearish on the upcoming market correction, the historically low inventory is still keeping it firmly entrenched in a seller's market.

buyer fatigue is real and mortgage applications are at an all-time low so with an easing of demand we are still seeing prices trending down.

keeping an eye on inventory will be our leading indicator on when (or if) a crash is coming. 

so stay tuned! as always, 
my promise to you each and every week is to act as your personal assistant and help you understand what's happening in the world of real estate.

If there's something you'd like me to include in a future newsletter, please let me know!

until next week!

-realtor josh

 

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