Explosive Homebuyer Demand Driven by Robust Job Market
Where is the beef? Sorry? Where is the crash? I’ve been hearing for the last three to five years that the market is going to crash, up to 20% down. I’m not seeing it. I’m going to show you why the price is actually gonna go up and there is no housing market crash. But then you decide which way is gonna go. The busy home-selling season is here. It’s May 2023, almost into June. It has been very busy in March, April, and May. And the momentum, the powertrain in real estate housing is increasing as the day goes by, despite the fact that home affordability is at its lowest in lots of lots of years, and the home prices are high, the highest in lots of lots of years. Interest rates are high, inflation is high, but the buyer demand is very strong. So with those terms and conditions, low affordability, yet strong housing market demand, where is the market headed? It is a confusing market.
As agents, we can tell there’s a lot of activity because we get a lot of calls on brand-new listings. When we do open houses. We are seeing that in the summer of 2022 and fall of 2022, there were five or ten groups trickling in. Now there are 30 to 50 groups per day, Saturday and Sunday coming in. We’re also seeing that listing the prices of homes are selling over listing prices, and we are getting multiple offers on homes that are priced very well. I just wrote an offer, two offers last week, and my buyers did not get them because there was multiple offers and we got beat out by stronger offers, stronger home prices. But let’s look at the actual numbers so I can show you that it’s not the agents saying that the market is good because a lot of people complain, consumers complain, agents want to sell homes, agents want to make commission. They are driving the prices up. They are pretending there’s multiple offers. Hey, that’s all well and true and you’re welcome to your opinion, but the fact is, let’s look at the numbers and I can prove to you that the market is going to go up and buyers are buying homes despite the low affordability and despite the fact that home prices are at its peak since the last twelve years. Interest rates are highest in the last five years and inflation is high. So what gives?
One way to tell why there is a housing demand or is there is a housing demand to buy homes is to look at actual charts. Here is a chart by showing time showing index. It measures the number of traffic that people see homes nationwide. If you look at the chart, it shows that in 2017 through 2020, the average showing was approximately 150 or so. During the Pandemic years, 2021 and 2022, the numbers went up to 271.3 and 284.4. And yes, it did come down in 2023 at 223.9. So, yes, there is a decrease in showing from the last two years. But if you look at the previous six, seven years, it has come up again. And one of the reasons the traffic is low is because there is a shortage of inventory. And we will look at that. So this chart shows that there’s a lot of buyer activity. Not only are they seeing homes, based on this chart, it is going up every month. And they’re actually buying them based on the multiple bids and the based on the fact that homes are selling over list price in this spring of 2023. So now the question is, the prices are high, affordability is low. So why are buyers still looking for homes and still want to buy houses in this hot market, high-price market? Well, it has to do with the job market. Let’s look at this chart that explains what’s happening with our job market. And this is based on all of USA. Here’s a quote I’m going to read out to you from the Federal Reserve. With inflation still high, the Federal Reserve, the Fed repeatedly hiking the federal funds rates, and a lot of chatter in the media about a recession. It might surprise you just how strong today’s job market is. What might be even more surprising is the fact that it appears to be getting stronger. Let’s look at this graph below. As you can see, in March 2023, there was 155,000 new jobs. And in April of 2023, there was 253,000 jobs added, which is 100,000 more jobs than the previous month. So as long as there are jobs, as long as there is job growth, buyers are going to start looking for jobs. If you look at 2008, there was no unemployment. Jobs were decreasing every month for at least a year or two years. Job market was decreasing as far as new job goes. And the homes sat on the market, there was a lot of inventory. There were no jobs, so they sat on the market. This time around, there’s job growth, shortage of inventory. So homes are being sold. That’s one of the reasons buyers are flocking to buy homes. Not just buying homes, they are flocking to buy homes. That brings us to another topic, which is unemployment.
In 2008 or 2005 and six and seven, the unemployment rate was up to 14%. If you look at today’s market, it’s down to three and a half percent. Let’s look at this chart. Unemployment rate drops to 50-year low. If you look at 2020, January 2020, the unemployment was 4%, but then it shot up to almost 14%. Of course, those was those pandemic years. And as we continue over the next few years, it has gone to 8% to 6%. In 2020 May, it was almost 4%. And right now, as of April 2023, it’s down to 3.5% unemployment rate. So if you look at the 2008 recession, unemployment, and now there’s a lot of people employed and the employment rate is pretty significant. That adds to the fuel of buying homes. And here’s another quote. With so many people steadily employed and financially stable right now, they’re still able to seriously consider buying a home. So what does this all mean to you? Well, if you’re a seller thinking about selling, this may be a good time for you because the prices are at its peak. And of course, we’ve been saying that for the last two or three years, but they keep going up and up and up. So yes, they may go up next year and the year after that. But even then, if you’re a seller, this is a great price you can get, because buyers are buying and sellers are happy with that tune that they’re hearing, that there’s demand for homes. And if you’re a buyer, as I mentioned earlier in my previous video, when is the good time to buy? And I keep saying it the best time to buy is when you are ready, willing, and able to buy.
Are you ready to buy a house? Do you need to move because of job, because of school, because of the hospital? Are you ready to move because you want a change of life? And are you able to buy? That means, do you have the down payment? Are you pre-qualified? Are you approved? That means that if you are ready, willing, and able to buy, buy now. Don’t wait, don’t chase the market. I know people have been chasing the market for the last two or three years. And guess what? Prices have gone up and up and up and up. In fact, for the first time in history, the home prices have gone up since 2010. That’s almost a twelve or 13-year run of higher prices. That has never happened in history. And the experts and the gurus and the financial analysis people who do all these studies are saying that they’re going to go up next two or three years by almost 2% or 3% a year. So if you’re a buyer, buy now. Are you ready, willing, and able to buy? Because you cannot chase the market. Rates are high. Yes, you can always refinance, and if you’re going to keep your house long term, at least five, six, seven years. Historically, home prices go up 4% a year over the last 30, 40-year period. So, yes, if you buy high, your prices are going to go up anyways if you stay there for 10-15 years. So it doesn’t matter if you buy a house for a million dollars, it may be worth $2 million in 20-30 years. And if you’re paying high-interest rate refi when it drops, it’s that simple. So going back to people saying over the years, in the last two or three years, with the forbearance during the pandemic, foreclosures are coming, home prices are going to crash, home prices are going to go down by 20%. I don’t see it. These numbers show that they’re not going to go down 20%. Chances are they’re going to go up. So if you’re a buyer, go for it. If you’re a seller, you’re going to get as much money as you can. Thanks for watching. Please subscribe to my channel, and make some comments so we can interact on comments on my video. And please watch this video. It says no more mortgage payments. It shows you how you can pay off your house earlier than waiting for 30 years to pay it off.