Housing Report: Navigating the Summer Housing Market

Jun 23, 2023, 09:54 AM by Nuvision 

With the summer season beginning, the housing market is entering its second busiest time of the year. While spring traditionally takes the top spot, summer can be an excellent time for both buyers and sellers. But since the market is anything but predictable lately, it's important to keep a close eye on current market conditions, along with historical trends, carefully assessing the risks and opportunities that could lie ahead.

The Summer Market Shift: What it means for Buyers and Sellers

According to Steven Thomas, author of Reports on Housing, we are coming out of what is historically the hottest time of the year for housing. "Demand typically peaks during the Spring Market, between mid-March and the end of May. As soon as the last bell rings, marking the end of the school year, families may still have housing goals of selling and purchasing, but that often takes a back seat to enjoy all that summer has to offer. As a result, summer is the second busiest time of the year for housing."

During the summer market, demand decreases slightly with all the distractions. Thomas says, "For many buyers, it still feels as busy as ever, but the numbers illustrate a drop in demand regardless. With a decrease in demand, the number of available homes rises as more homes continue to come on the market."

Many sellers mistake summer as the best time of the year for housing. With a drop in demand and a rising inventory, the Expected Market Time, the amount of time between hammering in the FOR-SALE sign to opening escrow, grows longer. The overall speed of the market slows a touch.

A Look at the Data: Mixed Sentiments in the Housing Market

Market experts have varying views on the housing market's current state and where things are heading. Orphe Divounguy, the senior macroeconomist at Zillow, sees positive signs, citing increased builder confidence over recent months.

Divounguy told Yahoo Finance, "There has never been a better time to be a homeowner." Homeowners have seen exponential growth in their home equity over the past few years. Currently, homeowners have an average of "$302k in home equity," which is near an all-time high. However, not everyone shares the same optimism.

Tight Inventory and Rising Prices

But not everyone is so optimistic, as the housing market is showing clear signs of tightness, causing home prices to skyrocket by an astonishing 44% since the onset of the pandemic. Redfin data reveals that the median home price in the US now stands at approximately $419,000, making it hard for first time home buyers to jump into the market.

Another issue plaguing the market is limited housing inventory, with 39% fewer homes available than pre-pandemic levels. According to estimates by Freddie Mac, this drop in available properties has created a substantial shortfall of about 3.8 million housing units.

New home buyers are facing a particularly challenging environment in terms of affordability. Edward Seiler, the Mortgage Banker's Association's associate vice president for housing economics, highlights the unprecedented difficulty for new buyers to enter the market. "For new home buyers, this is the worst situation since the end of the Great Recession," Seiler said. "Current homeowners that were lucky enough to get a 2.75% interest rate in 2022 are in a great position, but for new home buyers looking to buy a first home, or those looking to move to another home, it's a very daunting proposition."

Opportunities and challenges

The summer season brings about a shift in the dynamics of the housing market, presenting both opportunities and challenges for buyers and sellers alike.

According to Steven Thomas, "In the coming weeks, buyers, sellers, and everyone connected to the real estate market will feel a slight slowdown in housing. They will scratch their collective heads and wonder what is going on. No, housing is not suddenly shifting completely in the buyer's favor. Instead, it is shifting to a new cyclical season of the year: SUMMER."

Ultimately, staying informed and adapting to the quickly changing market conditions will be crucial for success in the summer housing market. That’s why we encourage you to reach out and speak to an expert and keep an eye out for our housing reports and financial news updates.