A true data geek, Mike founded Altos Research in 2006 to bring data and insight on the U.S. housing market to those who need it most. The company now serves the largest Wall Street investment firms, banks, and tens of thousands of real estate professionals around the country.
As expected prices rose and available inventory dropped this week for single family homes around the country. It’s the middle of January and the first of the spring buying season homes are being listed right now.
As we’ve been noting, all the early indicators show demand as high as ever with buyers fighting over tight supply and driving prices higher. This week is no exception. You know, one of the reasons we do this analysis weekly is because when there are finally signs of the market turning, we want to see them quickly.
For example if mortgage rates continues to spike, how quickly do home buyers notice and react?
Traditional real estate data is released monthly, so by the time it gets to you it’s kinda old news. The news right now is that it’s a hot market already for the spring, and the economic risks, like rising rates or inflation, have not yet derailed that eager buyer acting.
Let’s start with home prices this week. The median price of a single family home in the US right now is just over $370,000. That’s up a fraction from last week, and up 10% over last year. I
n this measure of asking prices around the country we’re looking at the whole market, all the homes you’ll see if you start shopping today. That includes stuff that was listed last fall.
So median home price climbs as new inventory hits the market each week this spring. It’s still early in the year, the bulk of the volume is March April and May. But you can see the prices ticking up each week already.
Each year, the absolute peak in asking prices hits in the middle of summer. Last year we peaked just under $400k. Never quite got above $400,000. You can imagine the psychological barrier for listing your house for sale. The big round numbers are hard to break through. If you can list at $404,000 or $399,000, you tend to slide in just under the big round number.
So, it’ll be interesting to see this year when the median price in the US crosses that $400k threshold.The price of the newly listed cohort also ticked up this week to $355,000. After a big jump last week, the price of the new listings just ticked up fractionally this week.
Remember that the price of the new listings is where the sellers and the listing agents show us everything they know about their local supply and demand. When they see demand is hot, they know to list their property a little higher. So, big jump last week, a little uptick this week, expect to see more jumps in the next few weeks.
If there were some sudden demand shift, this is one place we’d pick it up quickly. Speaking of those new listings, we can see that almost 18,000 of them hit the market and got offers essentially immediately this week. That’s up from 13,000 last week which was still including some New Years week transactions.
We have an additional 38,000 new listings this week which are going to require more than a week to sell, heaven forbid. You can see we’re at the annual low of listings volume, and that it’ll climb each week through Q1 and Q2.
When we report this data, it’s kinda abstract (17,000 homes) so it’s been fascinating to hear the last few weeks from Altos subscribers about their personal anecdotes, bidding wars, and immediate sales that they’re experiencing with their buyers and sellers right now. It’s always satisfying when the stories from the boots on the ground jibe with the data.
So, the signal here is that immediate sales have not abated, continue to be 25-30% of the new listings, and are building each week with total volume in the spring. Again, if the market cools, we should see the percentage of new listings that sell immediately start to fall.
Total real estate inventory
That brings us to total inventory for the week. As it’s early in the year, new listing volume is still low of course but demand is unseasonably high, that recipe brings us to another new record low for unsold available real estate inventory. Down to 284,000 single family homes. Available inventory is a couple percent fewer than last week, 27% fewer than last year, and 7% below last year’s previous record low recorded April 30th.
The signal I keep looking for here is the annual bottom. It’s not uncommon for inventory to drop a bit in January. Bounce along the bottom until February. Last year inventory didn’t bottom until April 30. So, this week another drop, still looking for that annual low. Not there yet.
I’m also curious about the investor and speculator activity in this market. When we get into the heavy frenzy mode, it triggers a lot of speculative buying. When that speculation gets too intense, that’s not a healthy sign. It’s artificial competition for homeowner buyers, it leads to fraud and other negative symptoms. The bubbles are really notable by that speculative activity.
One way to track investor/speculator activity is through price increases. The percent of homes on the market that we saw on the market recently at a lower price. With a fix and flip, you buy the property, put a little money into it and resell it at a higher price.
Price increases as a percentage of the market are really skyrocketing right now. Currently nearly 6% of the market was recently listed at a lower price. You can see that’s a sharp climb in the last few weeks, slightly below last year, but well higher than any normal year. Usually a couple percent of the active stock is a price increase. We’ll be watching price increases for the next few months to track the speculative part of this hot market. It’s frankly a little scary. So fingers crossed.
OK that’s all the data for this week.
If you’re a real estate professional, people often ask, Mike can I get local data for my buyers and sellers right now? The answer is yes. To get your local data for your buyers and sellers, go to AltosResearch.com and join us. You can get your data into your clients hands today.
Because everyone needs to know what’s happening in this crazy real estate market. It’s your opportunity to help them succeed. I appreciate you being with us. More next week.