I want to give you a status report on the state of the real estate market as of August 2022. We’ll look at some articles about listings, some data and trends, and what social media influencers and economists are saying about the housing market.

Let’s go.

The demand is completely destroyed?

According to Redfin, “New listings are down 12% from a year ago as sellers respond to waning homebuyer demand. Still, overall housing supply is on the rise—a sign that buyers are pulling back more than sellers.”

It sounds scary, but remember, the media is all about writing what gets you to click on their article. You can read the whole article on Redfin’s site to see the full details, but here are some stats and leading indicators (of homebuying activity) from the Redfin article:

• For the week ending August 11, 30-year mortgage rates rose to 5.22%. This was down from a 2022 high of 5.81% but up from 3.11% at the start of the year.
• The latest Home Purchase Sentiment Index from Fannie Mae indicates that the share of people who believe now is a good time to sell is rapidly declining.
• Fewer people searched for “homes for sale” on Google—searches during the week ending August 6 were down 23% from a year earlier, but up 12% from late May. (This is why companies like Zillow are looking for other ways to earn money, because they know they are selling less leads to agents.)
• The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 9% year over year during the week ending August 7, but is up 17% from the week of June 19.
• Touring activity as of August 7 was down 7% from the start of the year, compared to a 15% increase at the same time last year, according to home tour technology company ShowingTime.
• Mortgage purchase applications were down 19% from a year earlier during the week ending August 5, while the seasonally-adjusted index was down 1% week over week.

(Source: Redfin)

You see a lot of people on YouTube who see “new listings are down” and eventually conclude that there is a housing crash, and they proceed to gather evidence that “supports” this claim.

A YouTube channel called Real Estate Mindset released a video about Redfin’s article, and he says, “Here’s the other cool thing: Despite new listings being down 12%, inventory continues to surge month after month after month. And the reason that is, guys, is demand has been completely destroyed.”

Another YouTuber, Reventure Consulting, used several stats and pieced them together in a way that supports his claim that “As I said in the beginning, this housing crash in San Jose and the other cities I’m going to talk about on this video, is happening very, very fast. You can see that, if we go back to the last housing crash in San Jose in ’07, it started with smaller value declines: around 1% or 2%. We’re going all the way to over 4% or 5% per month, which is a huge deal everyone…”

Pay attention to the verbiage they are using, because a lot of people are using scare tactics to freak people out, (1) to get views and clicks, and (2) to sell people stuff, like coaching or books, etc.

That is why I constantly urge you to pay attention to the data and be careful about filtering the things you hear or read online.

What the REAL data shows

When you start looking at the real data and the numbers, you realize that the demand is actually still there, and what we’re heading towards, if anything, is a neutral market. This is according to the numbers, the economists, and people like me, who study this on a daily basis and live it. In comparison to the people who just kind of look into it and they’re employing scare tactics then sell you their coaching class.

So, let’s take a look at the rest of the data that Redfin presented in their article. These stats are based on homes listed or sold during the four-week period that ends on August 7^th:

• The median asking price of newly listed homes increased 12% year over year to $390,750. Asking prices are down 3.5% from the all-time high set during the four-week period ending May 22. Last year, during the same period they were down just 0.3%.
• The monthly mortgage payment on the median asking price home hit $2,290 at the current 5.22% mortgage rate, up 37% from $1,668 a year earlier, when mortgage rates were 2.87%. That’s down slightly from the peak of $2,464 reached during the four weeks ending June 12. (Yes, affordability has definitely become an issue in real estate.)
• Pending home sales were down 16% year over year, a slightly smaller decline than in recent weeks.
• New listings of homes for sale were down 12% from a year earlier, the largest decline since June 2020.
• Active listings (the number of homes listed for sale at any point during the period) rose 4% year over year.
• 38% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 45% a year earlier. (How can homes get an accepted offer within two weeks in a crashing housing market? Where things are falling apart? That won’t happen. If the market was crashing that 38% wouldn’t exist.)
• 26% of homes that went under contract had an accepted offer within one week of hitting the market, down from 31% a year earlier. (That means one out of every four homes gets an accepted offer within one week. Does that sound like a crashing market to you? — The answer is NO, in case you were wondering.)
• Homes that sold were on the market for a median of 22 days, up from 20 days a year earlier and the record low of 16 days set in May and early June.
• 43% of homes sold above list price, down from 52% a year earlier.
• On average, 7.8% of homes for sale each week had a price drop, a record high. (Yes, there are price drops. Sellers are a little panicky and are trying to sell their homes faster. They realize that the high asking price they thought they could get is no longer feasible, so they lower it to a more reasonable market value.)
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, declined to 100.6% from 101.7% a year earlier. In other words, the average home sold for 0.6% above its asking price.

A lot of people are generalizing it too, but remember, real estate is VERY regional. Looking at the real numbers helps you see a better, more objective view of the whole picture. A lot of people are panicking for no reason because they’re getting news that just doesn’t make sense—they’re getting clickbait. That’s what’s happening. And I don’t want you to fall for that.

We’re just getting into a more normal/neutral market, where there are more balanced buyers and sellers.

In Los Angeles, California (July 2022—updated since the video on August 15th), the median price was $1.2 million, home sales were at 953, and active listings were at 2,634, according to CAR (California Association of Realtors). The median DOM (days on market) is 13 days. Sales-to List price is 101.2%, and 31.8% of active listings have reduced prices.

These stats won’t be shown by those people who are trying to freak you out.

According to Fortune, home prices are falling, and homebuilders have an oversupply. However, this is what they say: “But don't pencil in a 2008-style housing crash. This time around, homeowners are less debt burdened, and subprime mortgages are less of an issue. That said, had supply-chain constraints not held back homebuilders, it might have been a different situation.” 

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In a crashing housing market, you’ll see significantly high days on the market because people don’t want to buy, or they can’t afford to buy, but look at the stats in California according to CAR:

• Mendocino County: median time on market—50 days on market (DOM)
• Sonoma County: 26 DOM
• Marin County: 10 DOM
• Monterey County: 12 DOM
• Fresno County: 7 DOM
• Tulare County: 2.4 DOM
• Ventura County: 19 DOM
• Los Angeles: 10 DOM

And it looks similar in a lot of states across the US.

So, do me a favor. When you see these people saying that the housing market is crashing, tell them that they are not reading the data correctly. We real estate agents live this on a daily basis, and I get to talk to the most agents out of any other agent because I have the largest community of real estate agents in the world, all in one place. We get to talk about the updates in their areas and compare stories.

Right now, we don’t know where the market is heading, but I can tell you that there is no crash. Not in the next month or two.

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Pay attention to the data and don’t let other people freak you out, because if we let fear get into the decisions that we make, we end up making stupid decisions. Be careful about who you listen to and how you read the data.