Is the Real Estate Market Really Slowing Down?

Jun 5

Finding the truth among the sensational headlines

Let's talk about the current state of the real estate market.

You may have come across some doom and gloom headlines lately, with claims that the market is tanking, there are no buyers, and no inventory to be found.

Now, some of these things might be true, but here's the thing: you're about to witness a barrage of headlines that make it seem like the real estate market is in complete free fall or facing a disastrous situation.

However, let's take a step back and put things into perspective.

What’s really going on in the real estate market right now?

It's common practice to compare statistics in real estate from one year to another. We often look at how this year's numbers stack up against the previous year or even the year before that.

But here's the important point to note: the last couple of years during the pandemic created a unicorn-like period in real estate that we'll probably never see again.

During that time, historically low mortgage rates drove an incredible demand for homes. Simultaneously, the circumstances surrounding COVID-19 constrained the supply of homes for various reasons. The result? Prices went through the roof, appreciating at astonishing rates.

Look at the chart above. You'll notice that even when we compare the current demand (2023) to the years before COVID when things were more normal, demand is still pretty strong.

Sure, it's not at the same level as during the pandemic years, but let's not forget that those were truly extraordinary times that are unlikely to be repeated.

Moving on to the next graph, we can see the percentage of annual home appreciation.

Traditionally, national home appreciation has hovered in the range of three to six percent in any given year. However, during the pandemic, things went wild, and appreciation rates soared. Now, we're gradually returning to a more normalized market where we're seeing appreciation rates fall back into the historical range.

Yes, there was some depreciation in the second half of 2022, but we've made a bounce back at the beginning of 2023. The key takeaway here is that the market is not dead. It's just that comparing it to the outlier period of the pandemic can make it seem like a lot has changed when, in reality, we're simply returning to a more normal state.

So, my friends, don't lose hope. The real estate market is still alive and kicking.

Sure, there are challenges and fluctuations, but that's par for the course. It's essential to look at the bigger picture and not get swayed by sensational headlines. And remember, if you need guidance or advice, a real estate professional can be a valuable resource to help you navigate the market with confidence.

Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.