The market is slowing. Since last month, inventory has increased 133%, but at 0.7 months of inventory we are well within a Sellers’ Market, which is anything below 2 months. Revisiting the driving analogy, we were going 200 miles per hour, which is stupid fast and not sustainable, now we are going 90 mph which is noticeably slower but still fast. The question is when we will plateau from the slow down?
To gauge the market more accurately, we need to look at weekly numbers. Over the last 7 weeks, our active inventory has doubled while our pendings have stayed about the same (though dipped last week). Historically, the April/May timeframe is when supply and demand start to balance, so this isn’t unusual. The climbing interest rates puts a different spin on things. When the rates started to rise buyers were rushing to buy before further increases. Now, the reality has set in, and some buyers might bow out of the market, but there are plenty of people who want to be homeowners or do a buy/sell. They will still buy with the same methodology—buy based on what you can afford monthly, which will be lower than 3 months ago, and that is okay. The lower buying power will likely put downward pressure on pricing, but time will tell. We might have seen some artificial highs, but I think it will level off. This is not, I repeat, NOT a downward spiral like we saw in 2007. Even with a pending (current?) recession, real estate will remain a sound investment, and you must live somewhere.