Analyzing Real Estate TrendsReal Estate
There’s a great term for what might be happening in the real estate market today, it’s called a “suckers rally.” Granted, there are a lot of variables and moving parts to real estate but I can’t help but wonder if we’re seeing the last leg up in prices before a crash.
Right now, the median price of a house sold in the United States is $431,000. That’s below the all-time high of $479,500, set in September 2022. Prices pulled back in Q2 of 2023 to $418,700, a welcome relief. Still, this pullback only represents a 12.6% decline from the peak.
There’s a ton of seasonality in the real estate market and closing out Q4 2023 the forecasting model points toward an even lower median house price of $402,682. Forecasting to Q4 2024 (one year later) the model is showing the median house prices to be lower than this forecast.
Although the overall trend for house prices remains higher, the hockey stick increase in prices from 2020 needs to correct. I feel pretty good about Q4 2023’s forecast but as I wrote above, there are a lot of moving parts to the real estate market. The forecast for median prices to be lower one year ahead is a bit “if-fy.” My forecasting model gets less accurate the further into the future it goes because it’s the future.
Buying a house now
To buy or not to buy a house, that is the question. With the interest rate hikes by the Fed still working their way into the market and the median days a house sits on the market increasing, it’s looking like more pressure on house prices. Right now the median days a house sits on the market is 50 days, a pretty low figure. My forecast model is showing it to increase to 55 days for Q4 2023. It could go higher from here because we’re entering the winter months.
Overall, cracks are starting to appear in the real estate market, which is good news for homebuyers. I still don’t see a lot of pain for sellers yet but Spring 2024 could be a completely different picture.