If you follow the news, you may be left with more questions than answers about the current state of the housing market. Is the boom finally over? Is the market correcting or crashing? Here's what you should know.

The housing market is cooling compared to the previous two years, but everyone should remember that the past 2 years were extraordinary in nearly every way. Record-low mortgage rates, combined with millennials' entering their prime homebuying years, resulted in an influx of buyer demand. At the same time, there were not enough homes for sale due to years of underbuilding and sellers who delayed listing their homes due to the health crisis.

This combination resulted in record-high demand and record-low supply, which could not be sustained in the long run. The most recent data shows early signs of a return to the market pace seen in the years preceding the pandemic – neither a crash nor a correction. According to realtor.com,

“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):

The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.

And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.

Existing Home Sales Then and Now

Headlines are also discussing how existing home sales are declining, but perspective is important. Here’s a look at existing home sales in Conejo Valley going all the way back to 2017 using data from the FlexMLS (see graph below):

Again, a similar story emerges. The pandemic numbers (2020-2021) beat the typical year of 2017-2019 home sales. And according to the latest projections for 2022, the market is on pace to close this year with more home sales than in 2017-2019 as well.

It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:

“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”

Bottom Line

If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about our local market and what it means for you when you buy or sell this year.