Okay, I get it. You are tired of the usual market reports that cover where we are today. MBS markets, the CPI, inflation, interest rates and inventory. Same old. To be fair, this is all relevant data. Many look to market reports to understand when to buy or sell, how to price real estate listings, and what to expect.

So, on that last point, I took some time to review my own past articles, many even going back half a dozen years or more. What was I saying then? One interesting article (link below) was based on a Harvard study focusing primarily on supply and demand. In that article, historic trends pointed to a possible recession in or by 2024 (using my own math) as a result of the possible oversupply of existing homes. To clarify, recessions are not tied to the housing market, as we can clearly see with what is happening in the Nation today. Many economic factors are tied to the "R" word, and there have even been recent arguments that the traditional measure of a recession based on positive or negative growth and the gross domestic product are not relevant today.

2016 Article Link

Where am I headed with this? Based on the root of the article I linked above, we really have to take a look at supply, or more specifically, oversupply. How does the supply of homes today compare with the last housing market bubble? I won't focus as much on how it compares with historic trends, we've covered that dozens of times. That data, for those not paying attention, reveals that we are currently in a typical market with no indication of an oversupply on the market today. We sit at a comfortable balance with anywhere from 5 to 6 months’ worth of supply at the time of this writing. While land exceeds that, the supply of land is not unusual for our market, even during good times.

It is hard to calculate historic absorption, but I can look at average “days on market” for real estate for past years, and I do have previous market reports with historic data available on our brokerage website. According to the data and opinion in my 2016 article, our market would be in decline in the 2022-2024 timeframe. Below is some data that compares where we are today, vs historic years.

Summary: I have maintained my position that the Covid years supercharged the real estate market that was already primed for a “bubble”, this is common knowledge. However, Covid also created major supply chains and labor issues that built shelter for a construction bubble, limiting the number of new projects, at least in our region. As a result, the supply of existing homes is lower than it otherwise may have been at this time due to the astronomical cost. Though my data below is skewed (the Winter data was normally based on the activity from the Summer months, as an example), the takeaway is that since 2017, residential absorption has averaged about  5.4 months before a sale occurred, MORE than the estimated supply of homes today. Though I anticipate things will continue to slow, probably not much more than the proportionate increase of interest rates, which is also starting to see relief based on the most recent economic reports.

TIME OF WRITING: 11/11/2022
Residential Absorption: 5.2 months
Residential Number of Listings: 127
Land Absorption: 7.3 months
Land Number of Listings: 253

Residential Absorption: 5.4 months
Residential Number of Listings: 125
Land Absorption: 11.9 months
Land Number of Listings: 360