5 Reasons Today’s Housing Market Is Anything but Normal

There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.

Here’s the definition of normal from the Merriam-Webster Dictionary:

“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”

Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.

 
1.    Mortgage Rates

If we look at the 25 year mortgage rates  chronicled by Rate Hub, we can see the average rates by decade:

1970s: 5.0%

1980s: 20.75%

1990s: 14.25%

2000s: 8.55%

2010s: 5.85%

Today, the average mortgage rate stands at 2.24%, which is historically low
Currently, mortgage rates are anything but usual, typical, or routine.

3.    Home Price Appreciation

According to the latest forecast  from the Canadian Real Estate Association (CREA), home price appreciation will hit 32.4%. This is significant.

Currently, home price appreciation is anything but usual, typical, or routine.

4.    Months’ Supply of Inventory (Homes for Sale)

According to CREA:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”

As of the latest Halifax Dartmouth Market Activity Report from NSAR, the current months’ supply of inventory stands at 1.3. Well below the amounts for  a normal supply.

Currently, the supply of homes for sale is anything but usual, typical, or routine.

5.    Days It Takes To Sell a Home

The  days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In March 2019, prior to the pandemic, the average days on market stood at 37.5 , according to NSAR. Today, that number is almost cut in half and is now at 20 days.

Currently, the days-on-market metric is anything but usual, typical, or routine.

6.    Number of Showings to pending

According to NSAR Market Stats, the number of showings to pending stood at 7.5 in 2019. Today, that number is double at 12.0.

Currently, the number of offers per listing is anything but usual, typical, or routine.

Bottom Line

When…

Mortgage rates are near historic lows

Price appreciation is at historic highs

Housing inventory is less than half of the normal amount

The time it takes to sell a home is cut in half, and

There are twice as many offers on each house

…it’s hard to say we’re in a normal market.