Comparing annual real estate metrics is challenging even in normal timesThis is due to the inherent fluctuation in the market, making comparisons often less meaningful or accurate. This challenge is amplified when unforeseen, high impact events change the circumstances.
The period of the last two years, aptly described as a 'unicorn' - a term that usually indicates something very desirable but difficult or impossible to find - has profoundly transformed the real estate industry.
The pandemic has catapulted the demand for residencespeople were looking for the security and comfort of a home office, and preferably with a spacious backyard.
We saw an influx of buyers looking for first or second homes, driven by mortgage rates that hit historic lows.
The forbearance plan helped to virtually eliminate foreclosures, while home values reached unprecedented levels of appreciation. In short, we had a market that was strongly desired but difficult to achieve. This is what characterized a truly 'unicorn' year.
Now, as things begin to return to normal, the 'unicorns' seem to have galloped away, leaving us with a more familiar and less fanciful real estate market.
Comparing today's market with those years makes no sense. Here are three examples:
Buyer Demand
Contrary to what the headlines may suggest, the real estate market is still active with buyers. In the United States, more than 10,000 homes continue to be sold every day.
It is clear that buyer demand has decreased compared to the two 'unicorn' years.
However, when we look at the data provided by ShowingTime, and compare the current activity with the normal years (2017-2019)It is clear that buying activity remains robust, as can be seen in the chart below:
Residential pricing
It would be unfeasible to compare the increase in residential prices today with what we have experienced in the last two exceptional years.
According to Freddie Mac's report, both 2020 and 2021 registered historically high levels of real estate appreciation.
Below is a chart that also includes years considered more 'normal' for the real estate market, from 2017 to 2019:
It is noticeable that we are returning to a more conventional pace of property appreciation.
During the second half of 2022, we experienced several months of slight depreciation. However, as indicated by Fannie MaeIn the first quarter of this year, the market resumed a more traditional pace of appreciation.
Mortgage Foreclosures
Recently, alarming headlines have highlighted percentage increases in foreclosure filings.
However, it is important to note that inevitably these percentages will increase from foreclosure rates that were at historically low levels.
The following is a chart based on information provided by ATOM, a respected source of real estate data:
With the end of the moratorium on foreclosures, the numbers are expected to increase compared to the last three years.
Unfortunately, every year some homeowners lose their homes to foreclosure, an event that is certainly painful for these families.
However, when looking at the current numbers in a broader context, we can see that we are, in fact, returning to the 'normal' levels recorded between 2017 and 2019.
Summary
This year, we are likely to see a number of alarming headlines circulating about the real estate market. Most of these headlines will be the result of unfair comparisons to the extraordinary 'unicorn' years. However, it is important to remember that the real estate market retains its strength and relevance, and its ability to adapt to new conditions is an indication of its resilience.
Therefore, I invite you to connect with The Florida Lounge, one of our experts who can help you properly understand the market landscape.
Together, we can keep everything in perspective and explore the many opportunities that the real estate market still offers.
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Are you in doubt?
Now that you understand that it makes no sense to compare periods that are very non-standard, the famous unicorns. We can help you understand the behavior of the real estate market and thus consider investing in vacation homes in orlando. To take advantage of all the tips we have brought to you and go even deeper, you can talk directly to our relationship agents. They are always happy to talk to you with any questions you may have about investing in Florida.
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