July 14, 2024

Home Price Reductions on Active Listings

A quick look add a real estate market leading indicator,  price reductions on active listings, in a couple of main Metro areas in California and Arizona.

Home Price Reductions - San Diego real estate market forecast

 

 Keep in mind when looking at the charts, the notice the trendline of today’s price reductions versus price reductions last year in 2021.

Home Price Reductions on Active Listings

San Diego Real Estate

When I first started posting last year about a housing bubble I would get frequent arguments from people that it just can’t happen.   Usually, the arguments would go along the lines of, there’s just such a shortage  in housing and  huge demand,  a drop can’t happen. I’ve noticed just recently, that many of those arguments have vanished and been replaced with the theory that this is just a normal correction and will present some major buying opportunities for those who missed out when the market was super hot .

  • Data provided by Redfin, a national real estate brokerage:

San Diego price drops

Phoenix home price drops

Prescott home price drops

Well, I say to those people, I sure hope you’re right, but, personally I don’t think so!

The last few months have shown that we are in the topping phase of this huge bubble. Now with the latest Federal Reserve interest rate hike of three-quarters of a percent,  there can no longer be an argument about whether or not the bubble has popped. Keep in mind, the real estate industry is a sales industry, and as such, is usually over optimistic on home price appreciation. Therefore, the notion of a soft landing, normal market correction, a slight softening, or a great opportunity to buy a home if you’ve missed out before, are all standard clichés that are being promoted right now .

Keep in mind, that even though  I’m a license California real estate broker,  after retiring out to Arizona, I am no longer representing clients. Yes, I have no horse in this race, just reporting my thoughts and personal opinions from over three decades a residential real estate experience!

To wrap this up, I think that many areas that have seen astronomical, irrational home price appreciation over the past couple of years, are now going to see a similar but reverse price depreciation!  I think in many local markets, this depreciation will easily exceed 20% or more from the market tops!

There is a perfect storm forming in America. inflation, severe drought in the farm belt, the pandemic, food shortages, diesel fuel costs, and heating fuel shortages, baby formula shortages, shortage of and price of available cars, and the price of housing. It’s all coming together and could lead to real disaster for our economy.

Always keep in mind, that purchasing or selling a home is a major lifestyle decision, and as such, should not be rushed into. So, by all means, if you’re considering purchasing or selling real estate in today’s market, do your own homework and draw your own conclusions! But, also consult with your legal & financial advisors prior to making your moves.

My opinions here are just that, opinions!  The fact that I’ve been in the residential real estate market for over three decades, does not mean that my opinions are going to be any more accurate then your mother-in-law’s opinion, though I sure hope they are!

For those of you who may not be regular readers here is the link to the first warning blog post that I put out; my first post where I called the real estate market top was June 15, 2021 (https://brokerforyou.com/brokerforyou/real-estate-market-downturn/ ) . On June 17 I had a follow-up post ( https://brokerforyou.com/brokerforyou/real-estate-market-bust/ ) where I added additional indicators, that to me showed that the market was in a topping phase right now! I put the links to each one of those prior post above, and would suggest if you’re interested, to reread those posts!

Buckle up your seatbelt because the downward ride has just started!

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