The real property market, as well as other sectors, has gone through many changes and ups through the years. It’s like a familiar pattern and almost like an ongoing cycle we’ve seen in the past.
In reality, as we look at our present-day world, it’s evident that we’re still living in the same society, with the same but not exactly the same socio-economic structure and structure that we had several decades ago. This raises one question: Do we really at the edge of an imminent turnaround, or are we just stuck in the ebb and flow of a regular pattern?
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It is true that history repeats itself
As market shifts unfold, I believe the parallels in the past with the present are evident, especially when looking at the 1970s-1980s and the beginning of the 2000s.
The 1970s-1980s were a time when housing markets in the 1970s and 1980s were afflicted by the rising rate of inflation and rates of interest, resulting in the slowdown of the market. Incredibly, data from the past shows a disturbing similarity.
Our research reveals that the time needed for closing transactions was increased from 4.32 months in 2021 to a staggering 5.57 days in 2022. The extended timeline brings back memories of the slow market conditions of the 1970s and 1980s.
After a few years after, we witness a repeat of the same pattern, with the rumors of rumors and an ebullient market caused by loose lending regulations and unrestricted accessibility to credit helping ease the burden of an epidemic of health across the world.
Also alarming, the beginning of the 2000s saw an explosive price rise for housing and a shrewd loosening of the lending criteria. It is clear that the same pattern has been repeated in the last few years. home prices have skyrocketed to astonishing heights, fueled by shockingly similar elements.
I’m not trying to minimize any aspect; however, while the latest data may not represent the devastating subprime mortgage crisis and that ensuing global meltdown that occurred in 2008, it is an alarming warning of the economic risks lurking around every turn of the century.
How much speculative can we be in light of recent events?
Our data from the last three years offer an intriguing insight into the market for real estate. The overall picture of 2021 and 2022 portrays the same grim image of a market that is which is slowing to a halt, as evidenced by the lengthier time required to conclude transactions.
In this period, we had to face the stark fact that sellers and buyers could have been in a constant negotiation.
Examining the data from January to April each year, you can see the incredibly rapid changes that take place within the markets. The soaring number of transactions that are paid in 2022 indicates a flurry of buying activity caused by the low-interest rates on mortgages.
But the subsequent drop in transaction volumes in 2023 has us on the dark side and suggests a possible slowdown or perhaps an awakening of the rational mind.
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Comparing our data with national statistics
To give a wider perspective, Let’s look at comparing with SetSchedule data points against national statistics from the NAR. Based on the NAR, the real estate market saw substantial growth in 2021 thanks to an increase in the number of home sales and an increase in the cost of homes.
As we approached 2022, it appears that the property market began to cool down a bit which led to a slower rate of sales. Regardless of how it is localized or segmented, the residential real estate market isn’t free from the gravity power of the national dynamic.
The possibility of predicting a turnaround
By analyzing the data from the past and studying the current developments in the market for real estate, it is possible to forecast a possible turn or foresee the recurrence of an upward trend that we’ve had before. The present similarity in the forces driving the market indicates a familiar pattern that may repeat.
The drop in the number of days until closing a transaction and the average amount of time it takes to complete during the beginning of 2023’s first four months as compared to 2022 suggests the possibility of a bit of optimism, a glimmer of optimism lingering in the minds of sellers and buyers. While the number of transactions paid has diminished, it is foolish not to consider the unpredictable nature of market volatility and external forces.
If reducing the time required to conclude transactions continues throughout the entire year, this could signal a significant shift towards an era of selling. As the market grows and the competition among buyers grows, sellers may relish the possibility of better conditions and even higher prices.