National Data

Navigating the Sizzling Spring Real Estate Market

By Mike Simonsen on March 11, 2022


Stay up to date

Stay up to date

Back to main Blog
Mike Simonsen

Mike Simonsen is the founder and president of real estate analytics firm Altos Research, which has provided national and local real estate data to financial institutions, real estate professionals, and investors across the country for more than 15 years. An expert trendspotter, Mike uses Altos data to identify market shifts months before they hit the headlines.

We've all been assuming that as the US economy is exploding and everyone is employed and incomes are rising, the federal reserve has indicated they're going to start selling some of the mortgages that they own, that all of these pressures should push mortgage rates higher in 2022. And that will finally slow this super heated housing market. 


But it turns out that US mortgages are a global interconnected market and US home buyers are using much more than just mortgage rates to make purchase decisions. Suddenly this Spring, factors are conspiring to make it even more competitive than last year, if that's at all possible, but it sure seems like it is one factor. Even as mortgage rates are a full percentage higher than they were last year at this time, inflation is still far higher. In other words, the real rate that I am paying on my mortgage is actually negative with a 4% mortgage in a 7% inflation environment.


My real mortgage rate is negative and home buyers know this. My mortgage gets cheaper every day that inflation is above 4%, for example. If I'm a buyer and I expect inflation to stay elevated for maybe several years, then suddenly that makes it very attractive to actually have a larger mortgage. Add in the Russian war in Europe and that has the effect of adding uncertainty to the world economy. And so it's much less certain that we will keep expanding and therefore mortgage rates drop in that environment. 


At some point, this market's going to cool. The question is: what are we going to tell our home buyers and sellers today? And how will we know when to say it when the market finally does change? So that's why we're here today. 


Every week, Altos tracks every home for sale in the country, all the pricing, all the supply and demand. We analyze all the changes in that data, and we make it available to you before you see it in the traditional channels. I'm Mike Simonson. I'm the CEO of Altos. I believe that we can help buyers and sellers make smart decisions, even in these super crazy times. 


Let's take the next 50 minutes or so to dive into all the data. 


The first thing I'd like you to call your attention to this week is the Alto's Top of Mind podcast. If you haven't yet had the chance to listen to our podcast, it's been really terrific. We're doing interviews with the best thinkers in the real estate industry to add context to the data. We look at the data every week and we do these big webinars once a month, but the podcast interviews have been so powerful to add the ability to interpret what the data is doing.


These are the three most recent interviews we've done. Connor Sen is a Bloomberg columnist. And one of the things that we took away that I took away from the discussion with Connor was that everybody knows that is the global supply chain is backed up. It's hard to get parts. It's one of the things causing inflation. But in the housing market, what's happening is we have a ton of new construction in process that is unable to be finished because for example, garage doors aren't available. Our windows, our appliances. And as a result, we actually have very few new homes able to be bought and moved into today. And what Connor points out is that is adding pressure to the existing sales market. If you wanted to buy, you have fewer options in new construction right now. So this is how supply chain is driving our one of the other factors driving our hot housing market right now.


Dan Green, from And with Dan, we talked about how rising mortgage rates actually help increase the availability of mortgages to more people. We talked about incentives, especially all the incentives in the legislation for first time home buyers. Dan gave me a masterclass on mortgages, a really terrific conversation. Dan is a master communicator about the data. And so if you are a real estate professional, and you're thinking about how do I build a relationship with my clients through content, listen to the Dan Green on the Top of Mind podcast. You'll get some great takeaways there.


Finally, with Odeta Kushi, who's the deputy chief economist for American Financial. And with Odeta,we talked about how the dynamics of this seemingly unstoppable market are very different from 2008. A lot of our home buyers and sellers are still worried and they are not taking action because they are afraid of these bubble conditions. Odeta and I talked about how these are different, how last time was different. And this time is a much more conventional, strong bullish housing market.


Big ideas for today: Does inventory finally start climbing? When does it start climbing? What are the conditions that we can look for? I have some data on current mortgage rates and delinquency to put that in perspective: mortgage delinquencies. Are we going to see any inventory in changing mortgage rates or changing delinquency trends? We obviously have renewed buyer competition this Spring. We thought it might be cooler, but it's actually heating up. A lot of the data is pointing out what that means. 


And then of course, I try to use these conversations here to help us help clients through their fears right now, people are afraid to transact. They're afraid we're at the top of the market. They're afraid to miss out. We're going to try to use that context when we look at the data. 


Finally, we'd like to do some local trends. We've got a couple of really interesting stories this week to look at some of the local data. We'll take the next 50 minutes or so to dive through all the data, through the local markets.


Housing Inventory


Okay, let's start at inventory. We are record low available inventory of unsold, single family homes, only 241,000 homes on the market right now in the US. And what's fascinating is we are listing 75,000 or so new homes each week, and we're selling 77,000 of those. We are each week decreasing our available inventory.


And if you think in terms of months of inventory, we're actually nationally at three weeks of inventory, that's the sales rate, how fast all the inventory would sell at the current sales rate. We're at just over three weeks of inventory, it is remarkably low and it's still declining. And the annual trend, most years, inventory bottoms in January, or maybe February, and then by March each week, it's ticking up to prepare us for the full Spring buying and selling season. 


What's happening right now is that the buyer demand is increasing at a faster rate than the normal Spring listing demand. And so we're still decreasing. Last year the low point of inventory for the year was April 30th and inventory didn't start climbing until may. I was hoping that rising rates would cool this market and cause inventory maybe to start picking up earlier than last year at this time.


But so far, every week, week over week, we still have lower inventory. And so at this point, we'll probably hit a bottom of maybe 220,000 single family homes, by end of April. It'll be fascinating to see if it turns, if April 30th is again our turning point this year. 


We have a forecast of how we might think about inventory in a world where we assume that mortgage rates resume their climb and stay higher for the year. Inventory starts curving up January, February peak at Midsummer, June 30, and then start declining for the end of the year. We get fewer listings. We finish up the purchases in the third quarter and then a lot less in the fourth quarter.


So that's the normal curve. 2020 was the big pandemic year. We just changed all the rules. 2018 was the last time that we had rising mortgage rates. We went from 3.9 to 4.9. And what you can see is that 2018 started with inventory lower than the other years and then finished a little bit higher. This was a move from 3.9 to 4.9%. It slowed the market a little bit. It allowed for a few more listings and a few more buyers, and that let inventory build up. If you were a seller at that time, you actually could feel it. If you tried to sell, say in September or October of 2018, you could actually feel the slowdown. Ultimately you sold because it wasn't that big a deal.


And that's really the key here. If you have buyers and sellers worried about, or maybe waiting for inventory, because rates are going to rise. We can show 2018 inventory rose a little bit, but not significantly. 


Last year, we were already at record low. We had a little bit of more normal seasonality than 2020. We got back to our normal seasonal curve. We’ll add a little bit a little bit of inventory for the end of the year. Maybe we end the year at say 350,000 instead of just 310. Maybe that gives us a little more. 


What's interesting is the comparison between this year and 2018. In 2018 by mid-March inventory was already rising week over week. We were already in our normal cycle and now we're not there. What this tells us is that inventory increases are going to be very back end loaded. And it really tells us that probably it’s 2023 before there's any chance of significant slowdown, even marginal slowdown in this market. because it takes several months for inventory to build. It’s multiple years before it could get anywhere back to historical norms. And so what that tells us is that in 2022, the price gains, the tight inventory, the buyer demand is already pretty much baked into the data for the year.


And so it's unlikely to see any real slowdown. And so,  while we could see the forecasts by different companies for 2021 was a super strong. Maybe 2022 is going to be a 5% home price increase here, but really we can already see we're at 12%. Maybe it's another 15% home price gain because the dynamics, you can't turn the battleship quick enough. That's what we're looking at for the forecast. 


This model assumes that rates resume their rise. They jumped in January and February, but they've actually ticked down. And so that assumes they resume their rise. It assumes things like the war in Russia is doesn’t impact the economy, the world economy too dramatically.


In fact, rates peaked at the end of 2018. And so that's the time that we're comparing to. I mentioned Connor Sen, who is the Bloomberg columnist on our Top of Mind podcast. Connor pointed out that there are enough global factors of bond buyers who will keep likely keep mortgage rates under four and a half percent. Connor's forecast is that more rates will have a hard time getting above four and a half percent in this global macro market. I'm not an interest rate forecaster. This was Connor's take, and it's a really compelling argument.


What it says to us though, is that if rates can get up there and can help slow this market a little bit, it will be really hard for rates to slam the brakes on this market. The other thing to point out in this is the real interest rates. With inflation at 6%, 7% and the 30 year mortgage rate at 3.7, that difference means my mortgage gets cheaper by that much, every year, as long as inflation is in that place. And so if a buyer has expectations that inflation is going to stay elevated for multiple years, that helps that buyer to make a buying decision. 


Now, maybe in the bidding war, the buyer believes that mortgage rates or that inflation's going to stay high. That means it is actually a better deal for me to have that in a mortgage now. And it allows me to make a competitive offer in a competitive market. It's something to think about. And it's an opportunity to ask the question of your buyers, where do you expect inflation to be in the next few years, help them think about in those terms. 


But until if, and when rates finally climb, it's probably four and a half or closer to five before we can really measure the impact that adds to a little bit of supply at this point in our inventory forecast. If you have to sell your house because you are unable to pay your mortgage, then that becomes an opportunity.




The foreclosure process is finally emerging from the pandemic restrictions. And so there are more foreclosures happening. These are typical. The ones that are in the foreclosure pipeline right now are typically properties that were already delinquent pre pandemic, two years ago. And now it's legally the time to put those through, to actually complete the foreclosure process. Some of those are coming to market. Don't be fooled by the headlines though that say seven times more foreclosures are happening right now. Because what's really happening is that we are in this record few numbers of people who are delinquent on their mortgage. Rcord few people are behind on payments. And that is because when your home is gaining equity and your mortgage rate is locked super low, it's a really good deal to keep paying your mortgage.


And people figure out how to keep paying their mortgage, or if they can't, they sell, and they sell their home in seven days and they don't have to go delinquent and they don't have to hit their credit. They don't have to go into that foreclosure process and they can take their cash. 

So, as a result, the delinquency, the numbers of homes, the percentage of people who are delinquent and at any stage of delinquent on their mortgage is falling every month. It’s already passed the previous lows. It's at multi decade lows, and it's still falling. 


And what's interesting is we already know that January, February and March in terms of the market are way hotter. We already know that by the time they announce their March number in May or June, that's going to be even lower record few people in delinquency.


And that is why there's no inventory possible to come from this traditional source of inventory. We can already see that 2022 is baked into the data, even if there were some catastrophic event that forced more Americans to start selling their homes, or maybe forced them to not be able to pay their mortgage and go into a delinquent state. Even in that world, we are looking at the second half of the year at the earliest before that starts trickling in and really 2023. 2022 has really got all the data baked in already. 


Real Estate Prices


Okay, let's go to prices, the median home price in the US single family home. This is $394,500. We are only a few weeks into what is the normal increase in Spring home prices. It peaks, we have through April, May, June, and probably into July this year for home prices to plateau for the Summer. Pre pandemic home prices were at $319K. There was a tiny little dip, the three weeks of pandemic adjustment. By week five home prices were back and resuming their climb so that we had three down weeks. 


What we're looking at now is probably sometime in the next couple weeks, the median home price will cross $400,000, and that'll be the highest, the first time ever median home price in the us over $400,000. That'll happen in sometime in the next few weeks. 


New homes come to market, they get listed. And when we track the prices of those, it tells us where the whole market is going to be in a month because they get listed now, then they get offers, then they close and then that gets recorded. Our leading indicator for the prices for the whole market this week is at $399K, and there's a psychological barrier at $400,000. And so it'll plateau a little bit, right at at 400,000. In 2016, there was a plateau at $250K. And so we'll probably have a little bit of plateau over there before we cross $400,000. But all of the leading indicators here are about increasing prices, right? At some point it will go past that barrier and then there'll be the next psychological barrier will be for $490K or something like that. 


Price Reductions


The other leading indicator that we like to pay attention to are the percentage of homes on the market with price reductions. And if you'll remember about a third nationally will take a price cut in normal markets. That's a rule of thumb. Sometimes that's accidental. Sometimes that is a strategic. Sometimes that's an overly aggressive seller. There's a lot of reasons, but about a third don't get their offers and they cut their price before they sell. 


In hot markets, some of those do get their offer. And so then only maybe 20% need to take a price cut. Right now it's only 17% need to take a price cut. A third think they're overpriced, but only 17% have had to take a price cut because those guys are getting their offers. In 2018, we have rising rates beginning of 2018. And then as rates rose through the year, price reductions ticked up and then grew to the highest that we'd seen it in the last six, seven years.


So what that tells us is what we can expect in a rising rates environment. 37% felt cool at that time. If you were selling, you could feel it. Then what happens this year? In the third quarter, we actually had some cooling. We had markets that had been super hot, or, mid pandemic that cooled off. And probably we got back to a more normal set of price reductions. None of it was high, none of it ever cooled off into a cold market or a cooling market, but you could feel it slow down a little bit. As of right now in 2022, we are right on pace from last year as hot, if not hotter than last year.


And so what we'll have to see is price reductions, hitting a floor, and then start to ticking back up. And that will allow inventory to build. That means that I overpriced, I didn't get my multiple offers, the house sticks on the market for a week or two. But we've got several more weeks of that before really, probably April 30th, before we start getting that back up. We are well into 2023 before you would see any, any real signs of cooling. that's how you can look at price reductions. You can look at this in your local market too. And when I show you the local market reports, you can use this to judge.


Your local market may be more commonly higher or lower than 30%. Places like Phoenix tend to be more like 40$ or 45%. There's a lot of investors. There's a lot of inbound immigration buyers in Phoenix. That tends to have more price reductions. In a lot of the hot California markets where inventory is chronically short, it’s much more common to be only 20% with price reductions. Now we can use that as our local adjustment, but when I say 35%, I'm talking about a national rule of thumb. 



Immediate Real Estate Sales


The immediate sales are the phenomenon where the home gets listed and it takes offers within hours or maybe a couple of days of listing and is sold before the weekend. There's always been immediate sales. There's a lot of places where there's hot markets and you get homes that sell quickly, but it's really been a phenomenon in the post pandemic. Super low interest rates, the demographic trends, we have all of the confluence of the hot market, and you can really measure it in the immediate sales. 


This week of 75,000 new listings, 23,000 of them went into contract essentially immediately. It's an across the country phenomenon. You can see a slight differences. For example, Miami markets might have fewer of those, but it's across the country. And so in order to build inventory we need to see the listings that didn't sell climbing each week. And what we've been seeing is that immediate sales have actually been growing. 


And so the absolute number of the percentage has been growing. iI's like a third of the market is going immediately. I've been looking for this hoping that this shrinks a little bit, because this is where it shows us overheated. It shows a bad experience for a lot of the participants. And so it makes it harder for price discovery because people are just bidding. A seller doesn't actually know what their house is worth. Like we want to see fewer immediate sales really to have a healthier market. And hopefully we will see that start to slow, but there's been no signs of it slowing yet. So each week, keep your eye on the immediate sales to see if rising rates, for example, or maybe other macro economy, macro factors have allowed us to cool off at all. 


Housing Price Increases


Let's switch to price increases. Price increases are the percentage of homes on the market that have taken a price increase. Very commonly these are flips, investor flips. Maybe it's IBU people who bought the home, they put a little bit in and are re-listing at a higher price. Currently we're at 5.6% of homes that are on the market at a higher price. It's actually a little bit lower than last year. Last year, we were still surprised. And so we were surprised there were people who took their homes off the market over holidays. Then they came back on and re-listed in January, February, March. And so we were at 7% or 7.7%, the peak last year where it started ticking down again. This is really high, normally it's like 3% or maybe 4%. 


At the beginning of 2019, only 3% of the market was on with price increases. Those are fix and flips, people put money in. When the bubble's bursting, that's down to zero, because nobody can put it back on at a higher price. There's no flips happening. We're currently at 5.6%. 


If this gets too high, that's one of the signs of speculation of fraud, a potential. And those are the signs that get scary around things like a bubble bursting. We have a lot of investor buyers, but we haven't seen much evidence of like fraud, mortgage fraud, things like that happening. That's one of the signals that says these are organic buyers that are likely to continue their momentum



Median Days on Market


Let's look at market time. median days on market, we have a normal annual cycle. Normally this time of year 80 days on the market, maybe. But falling because we get faster inventory, we get more buyers in March, April, May, and then June. If they didn't sell the beginning of the year now, they're sitting around. And we have the 4th of July holiday, and then we start getting closer to school. And so the market time starts ticking up in the second half of the year. We have this very clear cycle every year. 


Very often the high end of the market may take a lot longer to sell. And we can look at that in some of the local data as well. But 50 days, peak market, right before the pandemic hit two years ago, we were at 84 days. It was on normal market time. And now we're only 35 days. 35 days on the market media across all price points, all the single family homes across the US active market right now. Basically what's happened is we've taken all of the long listings, either overpriced or the wacky places, or they're busy streets or things that normally take longer to sell those sell in hot markets. And in fact, if you're working potential sellers right now, one thing to point out is that the hot market is the time to sell your weird property. The stuff that's normally really hard to sell. It's a good time to sell those properties. 


If you're working with buyers, one caution might be don't be tempted to buy the really weird ones, because the really weird ones are hard to sell, unless you're in a hot market. It's something to think about for your buyers and sellers right now. 


You can see it in the market time. We're currently 35 days and falling very rapidly. Here's the price ranges. At Altos, we do every market, every zip code, every city state in price range, quartiles, a high end of the market may be behaving differently from the low end of the market. You can see this market segment on every Altos report. 


These are the market segments for the national view for all the homes in the country right now, high end of the market is $1,000,001 low end of the market is $135K. These are homes that are old 71 years. You could see that they are on small lots. A lot of these are in like the rust belt cities, and you can see where they come from. We can also see days on market in the middle $300K to $500,000 price ranges, they're 28 days.


They're still a little bit higher at the very high end and at the very low end of the market. By next week, though, it'll probably be at 28 days across the board because the other two will drop. The two outliers will drop. The technique here is that a seller may be thinking that they're at 28 days, but really they're pricing at the high end of the market. They're pricing at the low end of the market. You may see a buyer in a crazy hot market, maybe tempted, like an investor, maybe tempted to go for this low end— the hundred thousand dollars price range— and maybe tempted to buy. But it allows us to point out to them that when the market's not that hot, those are going to take much longer to sell.


And you can see it in this in the market segment. It's always very valuable to make sure that you're connecting your buyers and sellers with the price point in their local market. By the way if you haven't already, you should grab the Alto's market data ebook. What we do there is we teach you how to describe the way I am describing the data here, how to use the scripts, where to point out the market segments, how to talk about days on market, any of those elements. If you haven't already downloaded, I encourage you to download the ebook to learn how to use market data, to build your business. We try to show some of the more interesting ones, the price productions, and some of the other ones that are less common that you might not be familiar with. Get the ebook. 


Let's look at couple more stats, and then we'll switch over and look at a little bit of local. Then we'll wrap up. 


Market action index for the us right now is at 61. This is a scale zero to a hundred. Below 30 are buyer’s conditions. That means inventory is built and buyers are slowing. And therefore that speedometer will go down to the 30 mark. Below 30 buyers conditions can be associated with falling prices, stable or falling prices over time. But right now we're in strong seller’s conditions. It's across the country.


And it's increasing. It's actually increasing over last week. In 2021, when things were skyrocketing, we hit a peak at 65 mid summer last year, and we're already at 61 right now. We're likely on the way to a new record high this summer. And you can imagine inventory is super tight. Demand is super high. You can see all of those factors. Inventory has to climb significantly to bring us back down.


We haven't been nationally in a buyer's market for like a decade because rates have been low. The economy's been expanding because we've had a lot of investors buying homes. Because all of that, and inventory's been shrinking, we’ve been in sellers market conditions for many years. It'll take us many years to actually get back to anything cooler, but normally you might be more balanced and we just haven't been balanced since the pandemic at all. that's the trend over multiple years, you could see, we're not quite to last year's record high, but we are on our way. 


Orange County Real Estate Data

All right, I'm going to switch to some local data. I had a conversation this week with Raj Qsar, who is the CEO of the Boutique Real Estate Group in Orange County, California, and Raj had a buyer for a home in Yorba Linda and was trying to communicate to the buyer, what the competition was going to look like, how were they needed to structure their offer and why it might be sense for them to bid.


It feels like shockingly high numbers in Yorba Linda. This is Orange County. The market action index is at 90, it's up from last month. It's getting hotter right now. The percentage of homes on the market with price decreases is normally 30%. And in Yorba Linda, it's zero. Right now, we can see that inventory is 17 homes. Normally 120 maybe 150 homes. And we are at 17 homes. We're at 80%, 90%, fewer homes available right now in Yorba Linda. if you want to live there, you can imagine that having a little more in your mortgage allows you to overbid, beats your competition in the bid, because your payment is a little more, but the as the rates are still super low, that payment doesn't adjust very much. Because inflation is high means that next year you're paying with cheaper money. 


So for that buyer, it made sense. And Raj’s buyer got the house, had 40 competitive offers. We can see in Yorba Linda the lowest stuff at a million bucks. It is hyper competitive. There's only a few homes on the market. That's what Raj was able to do with his buyer, who was on the fence. Raj puts the Altos report in their hands and allows them to use the data, to make an intelligent offer and get the home they wanted to buy. 


Miami Real Estate Data

On Twitter this week, there was some speculation we saw of people thinking “Are Russian oligarchs in the US selling homes to maybe extract their cash. Sunny Isles, Florida is one town where there happens to be a lot of Russian investment. I was talking with Ines Hegedus-Garcia, who specializes in architecturally significant real estate in Miami, and she mentioned that they have 200 agents in that office in Sunny Isles. And so the question in Twitter was "Are the Russians running?"


We were looking at condos in Sunny Isles. I thought I'd pull that data up. Is there inventory? Are there a bunch of Russians suddenly selling? So here's three years of inventory, 1400 condos, 1500. Well, we're down to 552. Even if there are a few Russians maybe selling what we can see is nobody. There's nothing in the data to verify the claim that a bunch of Russians were selling homes suddenly in south Florida.


We're in the same conditions that we are everywhere else: tight inventory, falling inventory. This Spring, you can see some of those condos are very expensive, 5 million. They might take six months to sell, but anything under a million bucks is going pretty quickly. And you can see exactly what you're buying in that part of beautiful Miami. 


We can also see in the price range, quartiles exactly where the demand is. Single family homes in that $500,000, to $600,000 range where the super expensive ones taking a little bit longer to sell: price reductions, only 14% in Miami. Price increases is 8% because it's more of an investor market. And so there may be fix and flips happening but still pretty high on that side of the market. 


To just do a couple more, here's Des Moines, Iowa. We're at 63, strong sellers market, up from last month. And then Phoenix, I thought I would do a quick check on Phoenix. Phoenix is interesting because Phoenix is what I call a high beta market beta. In stock market terms it’s a stock that is more volatile than the market as a whole. When the market goes up, we'll go up more. Phoenix is a high beta market in real estate. when it's hotter, it's hotter than everybody. When it's cooler, it cools faster.


And here's one way you can see the beta, the measure of volatility in Phoenix. Pre-pandemic. we had two more weeks of market up. And then when the lockdown happened, Phoenix adjusted down very quickly. There's a lot of owners in Phoenix who said, I'm not getting stuck. Like I was in 2006. And so there was real strong price adjustment, $475k to $400k in just a few weeks. Though changed back very rapidly. Like the rest of the country came back very rapidly. In Phoenix, we had 1, 2, 3, 4, 5 weeks before the market turned around very quickly. Median home price in Phoenix is now over $500,000 and is going to tick up this year. You can see everything moving quickly in Phoenix because the market's hot. Therefore Phoenix is hotter than most.


Okay. That's our local data for the week. As a reminder, you can get the ebook. If you're at this point and you say, “Mike can we hit my local market?” The answer is yes go to right now, book time with our team, we will look at your local market. We'll talk about the scripts, about how you look at the data for your local market, how to help them understand about this competitive bidding environment and help your sellers plan appropriately. Is now of the right time to sell? Is it going to burst? Do we need to get out now? All of those questions you can answer with the data, help all of those fears. I encourage you right now to go to Our team is here waiting for you. Check out the Top of Mind podcast, and we will see you next Monday for some more data. Thanks everybody.


Get the latest articles directly in your inbox, stay up to date