Market Update May 6th, 2024

Over the past four days, the ARMLS database has recorded a significant milestone in the real estate market, with the monthly average price per square foot for closed listings across all areas and types surpassing $308, setting a new record at $308.01. This achievement not only marks a historic high but also highlights the market's robust performance despite ongoing predictions of a downturn. Such a surge in prices underscores a dynamic shift in market conditions, reflective of a resilient and upwardly trending real estate environment.

Despite continuous forecasts since 2018 by various YouTube housing pundits predicting an imminent massive price drop, the market has consistently defied these expectations. The persistence of these forecasters, who have been proven wrong year after year, seems to stem more from a desire to attract views than from solid market analysis. As their predictions fail to materialize, a noticeable decrease in their confidence is evident, possibly driven by an understanding that sensationalism, rather than accuracy, drives their viewership numbers.

The fundamental misunderstanding among these pundits lies in their assumption that a mere decrease in demand will lead to falling prices. However, the market dynamics are not that simplistic. It is true that low demand results in low transaction volumes, but significant price reductions typically require a combination of excess supply and desperate sellers. An illustrative example of this occurred from June to December 2022 when iBuyers became such desperate sellers. After accumulating homes at high prices to capture market share during a boom, they were caught off-guard by sharp interest rate hikes, leading to a rush to offload excess inventory at below-market prices, thereby impacting their financial outcomes negatively.

As we look towards the third quarter, a seasonal decline in average price per square foot is anticipated. However, the market's current standing deserves recognition for its resilience. Sellers, in particular, have reasons to celebrate the new record highs, which reflect not only a recovery but also a potential for sustained growth. The real estate market, with its cycles of ups and downs, continues to offer valuable insights and opportunities, rewarding those who understand its deeper mechanisms and timing.

Be prepared and plan accordingly! If you need a game plan and want to lay out a path to help build wealth or protect it, give me a call/text, I am here to help you! 

"In three words I can sum up everything I've learned about life: It goes on."
— Robert Frost

Have a great week everyone!