{"id":162058,"date":"2023-11-08T17:10:20","date_gmt":"2023-11-09T00:10:20","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=162058"},"modified":"2024-01-08T07:18:53","modified_gmt":"2024-01-08T14:18:53","slug":"the-housing-market-has-shifting-fundamentals-that-could-impact-prices","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices","title":{"rendered":"The Housing Market&#8217;s Fundamentals Have Changed\u2014Are Prices In Trouble?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The market fundamentals that have kept&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-real-story-of-housing-prices-why-growth-is-not-as-important-as-you-think\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">property values<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;stable through 2023 may be starting to change.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Since the beginning of 2022, as interest rates have risen, supply and demand have dropped somewhat proportionately. From a cycle-high in 2022, demand has dropped about 40%.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">But supply has actually dropped further\u2014about 45%. When this happens, prices can remain relatively stable while volume drops. This is exactly what we\u2019re seeing\u2014prices are up about 3% year over year, while volume is 16%.&nbsp;<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_654c22bc88fd5: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_654c22bc88fd5\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A Look at Supply and Demand<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In just the last few weeks, supply and demand are starting to move in opposite directions. One of the best lead indicators for housing supply is new listings (how many new properties are listed for sale each month).&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Looking at the graph, you can see two critical things are happening. First, new listings, which have been well below 2022 levels all year, just exceeded 2022 levels for the first time. Secondly, new listings typically decline seasonally toward the end of the year. This year, that\u2019s not happening\u2014or at least not yet.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"912\" height=\"580\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-1.jpeg\" alt=\"new listings 2021-2023\" class=\"wp-image-162061\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-1.jpeg 912w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-1-300x191.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-1-768x488.jpeg 768w\" sizes=\"auto, (max-width: 912px) 100vw, 912px\" \/><figcaption class=\"wp-element-caption\"><em>New Listings (2021-2023)<\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Of course, this is a very recent trend, but this could lead to increases in inventory, days on market, and total supply. In the chart from Redfin below, you can see that active listings (how many properties are for sale in a given week) are following a very similar pattern. Active listings have been climbing for months now and are not currently showing any sign of seasonal declines.&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1999\" height=\"677\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1.jpeg\" alt=\"Active Listings in All Metros (2021-2023) - Redfin\" class=\"wp-image-162060\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1.jpeg 1999w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1-300x102.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1-1024x347.jpeg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1-768x260.jpeg 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image1-1-1536x520.jpeg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\" \/><figcaption class=\"wp-element-caption\"><em>Active Listings in All Metros (2021-2023) &#8211; <a href=\"http:\/\/redfin.com\" target=\"_blank\" rel=\"noreferrer noopener\">Redfin<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Increasing supply doesn\u2019t necessarily mean there will be downward pressure on pricing if demand follows the same trend. The problem is that demand is going in the other direction. According to the Mortgage Bankers Association, demand continues to deteriorate and is now at the lowest point since the mid-1980s.&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1508\" height=\"1076\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image3-1.jpeg\" alt=\"Composite Index vs 30-Year Fixed Mortgage Rate (2019-2023) - Mortgage Bankers Association\" class=\"wp-image-162062\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image3-1.jpeg 1508w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image3-1-300x214.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image3-1-1024x731.jpeg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image3-1-768x548.jpeg 768w\" sizes=\"auto, (max-width: 1508px) 100vw, 1508px\" \/><figcaption class=\"wp-element-caption\"><em>Composite Index vs 30-Year Fixed Mortgage Rate (2019-2023) &#8211; <a href=\"https:\/\/www.mba.org\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/www.mba.org\/\" rel=\"noreferrer noopener\">Mortgage Bankers Association<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What\u2019s the Effect on Pricing?<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">When you look at recent supply and demand trends together, we should all expect downward pressure on pricing\u2014at least on a national level.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Although these indicators suggest prices will be pushed down a bit, I find it unlikely that they will turn negative on a year-over-year basis through the end of 2023 because prices corrected at this time last year. So when comparing 2023 numbers\u2014even if they come down a bit in the coming weeks\u2014to 2022 numbers, they are likely to remain positive.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As you look at this chart, you can see that prices were in a mild correction in Q4 2022 and into Q1 2023. Then, prices recovered and eventually turned positive this summer.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">So, while I think it\u2019s unlikely we will see negative prices on a national level this year or even in the beginning of 2024, the&nbsp;<\/span><em><span data-preserver-spaces=\"true\">real&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">test will come in March or April 2024. This is the time of year when prices typically start their seasonal decline. Yet since we\u2019re seeing some indicators buck their normal seasonal patterns, there\u2019s no guarantee prices will take off next spring like they normally do.&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1999\" height=\"755\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1.jpeg\" alt=\"Median Sales Price in All Metros - Redfin\" class=\"wp-image-162063\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1.jpeg 1999w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1-300x113.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1-1024x387.jpeg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1-768x290.jpeg 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image4-1-1536x580.jpeg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\" \/><figcaption class=\"wp-element-caption\"><em>Median Sales Price in All Metros &#8211; Redfin<\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The potential for a modest price correction in the coming months does pose a risk for investors. But it also creates opportunity! Remember that rising inventory and days on market shift the balance of power in the market. When there are more sellers than buyers, the buyers who remain have leverage and negotiating power\u2014this is often how&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/find-real-estate-deals\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">great deals<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;are made.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Bottom Line<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">My advice? Be careful and diligent, but keep an eye out for good deals\u2014I suspect we\u2019ll see more opportunities during the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/fall-winter-real-estate-market-2023\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cold winter months<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_84d686855e40df515ff2f5a5f5f71ef4\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_96d23c4783e9572493af5bbd2e04b80e\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_57297da93601ba804a8cfe9965f38527 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/the-housing-market-has-shifting-fundamentals-that-could-impact-prices&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The housing market is starting to show shifting fundamentals. What does this mean for prices over the next few months?<\/p>\n","protected":false},"author":108611,"featured_media":162067,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7381],"tags":[],"class_list":["post-162058","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-prices"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162058","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/108611"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=162058"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162058\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/162067"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=162058"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=162058"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=162058"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}