When it comes to real estate, comparing metrics from one year to another can be a challenging task, especially in a volatile housing market. The possibility of market variability can make the comparison less meaningful or accurate. Unforeseen events can significantly impact the circumstances and outcomes being studied. Comparing this year’s real estate numbers to the last two unicorn years is almost worthless. In this blog post, we examine how the pandemic has affected real estate and the challenges in analyzing real estate metrics from one year to another.
It is essentially useless to contrast this year’s figures with the two recent “unicorn” years. This is the less common definition of the term “unicorn”:.
“Something that is greatly desired but difficult or impossible to find.”
Real estate has undergone significant change recently as a result of the pandemic. People needed a large backyard and a home office as demand for our own homes skyrocketed.
- Many people bought their first homes and second homes at once.
- Mortgage interest rates, which were already low, reached record lows.
- Foreclosures were almost entirely stopped by the forbearance plan.
- Home values have increased at previously unheard-of rates.
It was a market that had always been “highly desired but challenging or impossible to locate. “A year of unicorns.
The situation is returning to normal at this time. The so-called “unicorns” have galloped away.
It makes no sense to compare the market today to that time period. Here are three illustrations:.
Buyer demand
The headlines would lead you to believe there aren’t any buyers out there. In America, we continue to sell more than 10,000 homes each day. Buyer demand has undoubtedly decreased from the previous two “unicorn” years. However, ShowingTime claims that if we contrast it to the years that are typically active (2017–2019), we can see that buyer activity is still robust. (see graph below):
Home prices
The price rises of recent years cannot be compared to those of today. Freddie Mac claims that the years 2020 and 2021 both had historically high rates of appreciation. Here’s a graph also showing the more normal years (2017-2019):
We can see that the increases in home values are getting back to more normal levels. The second half of 2022 saw a few months of barely noticeable depreciation. Fannie Mae claims that the market has, however, returned to more typical growth in the first quarter of this year.
Foreclosure
The percentage increases in foreclosure filings have already been the subject of some shocking headlines. The percentages will increase, of course. They represent increases from previously low foreclosure rates. Here is a graph containing data from the provider of property data, ATTOM:.
There will be an increase over the numbers of the last three years now that the moratorium on foreclosures has ended. There are homeowners who lose their home to foreclosure every year, and it’s heartbreaking for those families. But, if we put the current numbers into perspective, we’ll realize that we’re actually going back to the normal filings from 2017-2019.
To summarize, there are challenging times when it comes to comparing real estate metrics from one year to another. This is because the market can fluctuate, and unforeseen events can have a significant impact on metrics. These include the pandemic, increasing foreclosures, and the demand for different properties in various locations. The good news is that even with these challenges, Americans are still buying houses daily. Furthermore, the current foreclosure rates are in line with the figures for 2017-2019. Therefore, it would be best to put the current real estate statistics into perspective and be cautious when interpreting them.
