November 7th: Real Estate Update

Home prices are falling faster now than during the Financial crisis. (US home prices fell 27% between 2006 and 2012. San Francisco is already down 8.2%.)

One explanation for why this is happening is because of investors. Investors and iBuyers like Opendoor and Zillow, went on a buying frenzy with their algorithmic home buying programs. (Investors bought 24% of single family homes last year. Up from 15-16% annually going back to 2012)

With the real estate market shifting, these investors are the first to get out. Right now, they figure out the lowest comparable sale and then list their home for 2% below that. If it doesn’t sell right away, they price reduce the home again. 

These investors helped drive home prices up faster during the boom and will push prices down faster during the correction. Luckily, typical homeowners aren’t in dire straits. Total market leverage (including both first and second liens) was just 42% of mortgaged homes’ values, which is the lowest number on record.

In Mesa County

• There are currently 588 active homes on the market in Mesa County. This is a 3% decrease compared to last week

• The average sold price YTD $426,893 and the median sold price YTD is $387,00.

• There have been 86 price reductions in the last 7 days.

• The average DOM for the active homes is 64

Last Weeks New Listings

Last Weeks Sold Listings

NATIONAL MARKET UPDATE

Residential Construction Spending for September held pace with August, at a seasonally adjusted annual rate of $918.0 billion. It's now 12.7% ahead of a year ago, so more new homes will be coming on the market.

Realtor.com reports the active inventory of homes for sale continues to grow and is now 36% above its level of a year ago. This followed the prior week’s 34% increase, the first big gain in inventory since July.

The PWC and Urban Land Institute expect that days on the market for listed homes will continue to rise in 2023, good for buyers, and average home prices should be 30% higher than before the pandemic, good for sellers.

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