Is the Market Going To Crash?
A market update and comparison to show that things are not crashing.
Lately, we’ve been asked if the market is crashing. We don't have a crystal ball, but no; the market is not crashing. Let’s go over what happened in the housing market in July 2022 to explain why.
A crash is defined as a sharp drop in pricing. It’s true that prices recently dropped, but this was due to interest rates and seasonality. Two things drive real estate: interest rates and jobs. The most recent employment report showed that almost 600,000 new jobs were created last month, which outpaced expectations. Interest rates went up, but over the last few weeks, they’ve decreased and have reinvigorated prospective buyers.
"Things are normalizing and the market is balancing out."
In July 2022, our area saw 4,279 closed homes. That’s a 20% month-over-month decrease and a 30% year-over-year decrease. The closed average price took a dip—it was down just over 3% but is still up over 11% compared to last year.
We also now have more inventory. At the end of last month, we had 7,361 active properties, which was over 20% more than the previous month and over 80% more than a year ago. The average monthly rise in inventory levels is about 5%, so seeing a 25% increase between June and July shows that things are normalizing. A balanced market is four to six months of inventory. For the last few years, we've had less than one month of inventory.
If you have any questions, feel free to reach out to me by phone or email. I’m happy to help.