September 26th: Real Estate Summary

Mortgage rates continue to get pummeled and jumped to 6.87% today. Sheesh! That's the highest in 20-years.

I recently read an article that compared today's real estate market, to the market in 1978-1982. House prices were increasing sharply. Demographics were very favorable for homebuying as the baby boomers moved into the first-time homebuying age group (similar to the millennials now). And inflation picked up from an already elevated level due to the second oil embargo in 1979, followed by the Iran-Iraq war in 1980, driving up costs.

Link to article or continue on for my summary....

This graphs shows year over year inflation. The black arrow points to the pickup in 1979. Inflation was elevated prior to the oil shock and inflation picked up this time due to the pandemic.

The recent year over year change in mortgage rates is bout the same as during the late '70s period.

Real house prices peaked in 1979, and then decline about 11% over the next 3 years. Note that in nominal terms, house prices increased slightly during that period, but the high inflation rate eroded the real value.

You want my best guess as to what is going to happen to the real estate market? Well... that changes every week as we continue to digest and get more information. But for now, my best bet is that we see a similar market to what we saw in 1979-1982.

In Mesa County

• There are currently 588 active homes on the market in Mesa County. This is a 9 percent increase compared to last week

• The average sold price YTD $429,408 and the median sold price YTD is $389,000.

• There have been 106 price reductions in the last 7 days.

• The average DOM for the active homes is 62.

Last Weeks New Listings

Last Weeks Sold Listings

NATIONAL MARKET UPDATE

It was a surprise to see August Housing Starts surge 12.2%, to a 1.575 million annual rate. Not surprising was the 10.0% dip in new Building Permits, since the backlog of homes authorized but not yet started sits near record highs.

Equally unsurprising, the September NAHB homebuilder sentiment index dropped for the ninth month in a row to a 46 read. Scores below 50 indicate more builders see conditions as poor, versus good.

August Existing Home Sales, off 0.4%, slipped for the seventh straight month, the longest streak since 2007. Annual median price growth fell to 7.7%. Demand stayed strong--81% of sold homes were on the market less than a month.

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