We wouldn't have become realtors without being fascinated by market trends, and the current snapshot sure is fascinating! After an intense spring market with inventory remaining at historic lows and competition making it incredibly difficult for buyers to get into contract, the last few weeks have finally started to show some slight cooling. To many, including us, it's a welcome relief as the rate of appreciation felt unsustainable (15% year-over-year from April 2021 to April 2022). The numerous dynamics leading to this trend shouldn't be seen as concerning (remember, interest rates are still low compared to the past many decades!) and to put some more color behind that statement, we've pulled our favorite recent remark from Compass Chief Economist, Patrick Carlisle:
"Even the hottest markets eventually cool. This does not necessarily imply a large “bubble and crash” (terms much overused). Over the past 4 decades, a cooling shift has typically meant a gradual decline in sales activity, then either a leveling off in appreciation or price declines of 5% to 10%: More like a slow leak in an over-pressurized tire than a blowout at high speed. The 2008 subprime crisis – a true bubble & crash – was an extreme event brought about by a massive failure of ethics, underwriting standards and risk management in the loan, banking, investment and ratings industries. When hot markets shift cooler, effects are typically first reflected in reductions in multiple offers, overbidding and the number of homes going into contract; gradual increases in active listings and time-on-market; and gradual declines in year-over-year appreciation rates."
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