Housing Market Update: Buyers Are Gaining Ground!

The spring housing market is shifting. Home prices are still elevated, there's no doubt about that. However, the data shows that listings are rising, homes are staying on the market for longer and buyers are gaining more ground. So in today's video, I want to walk you through the data and explain to you what is going on. Okay, now let's begin with this high level overview. This is with the most recent data as of the month of April. So right now the median home price is $438,357. This is up 1.2% year over year. Homes right now are taking longer to sell, they're on the market for 40 days. Compare this to a year ago, so 12 months ago it was at 35. Existing home sales are down 4.7% from last year. Active listings are up 12.5% compared to last spring. So this is the highest inventory since before the pandemic. So this is the first spring in years where inventory is rising meaningfully and it's giving buyers more leverage. So listen, this is very important to understand. Buyers are gaining more power at the bargaining table, right? However, don't confuse that with a housing market crash because that is clearly not happening. Just look at the charts. In the US, the median price of a home has gone up by 1.2% year over year. So I understand that in some places, home prices may be down by 8%. But that just means that in another area, home prices are actually up by 9.2%. That's how math works out. So if someone says that home prices are down in their area, listen, I believe you completely. But believe me you, home prices are up in another area. Now take a look at this. Homes are sitting on the market for 40 days. That's the median. 12 months ago is at 35 days. So this means that it's taking longer for sellers to sell their properties. So look at where it was in 2022. Your typical home was selling after 18 days. So that's clearly, you know, 18 days, that's so quick. That's clearly a seller's market where buyers are just pouncing on whatever decent listing hits the markets. But I'm telling you, those days are over and here we sit at 40 days on the markets. So personally, I mean, I've been looking at listings and I've seen some decent properties, not cheap, but decent properties. And these are properties that I know that they would have been snapped up so quickly back three, four years ago. Now when you take a look at the number of homes sold, it's down 4.7% compared to last year. So this is a five year chart. And as you can see, it's been trending down. And I would say not surprising given how home prices remain elevated and mortgage interest rates are as high as they are right now. I mean, just look at April of 2021, for example, 621,000 homes sold. This April of 2025, 431,000 homes sold. Home sales are down 31% since then. And also take a look at this, look at how the supply of homes has been increasing. So essentially there are more sellers. The number of homes for sale is at 1.88 million. That is a 12.5% increase from last year. So compare that to where we were the past three years. Last year, we are at 1.67 million. Two years ago, we are at 1.44 million. Three years ago, we're at 1.41 million. And here we are today at 1.88 million. That is a 33% increase in the number of homes for sale compared to 2022. And I want to show you this, 30.3% of homes are selling above list price. This has fallen by 3.3% compared to 12 months ago. And look at where it's fallen compared to just look at 2021 and 2022. In 2022, 58% of homes were selling above list price. Isn't that crazy? So we're back in the normal range around 30%. And this is another indicator that the power between the sellers and the buyers, it's been evening out. Okay, now we have to review mortgage interest rates. So you're looking at the average 30 year fixed. So this is a weekly chart for the past five years coming from the Federal Reserve. So last week, the average interest rate on a 30 year fixed was at 6.86%. So just under 7%. Okay, so here's the bad news. This mortgage interest rates on the 30 year fixed, it's correlated to the interest rate on the 10 year treasury yield, okay? And the 10 year treasury yield has not been falling, which is why mortgage interest rates are not falling. So there's, there's a reason why this is happening, which I cover in my other videos that focus on the debt markets. But that's why we're just simply not seeing any meaningful downward movements in mortgage interest rates. You could blame it on the 10 year yield. So I want to show you this overview of the mortgage interest rate situation. With a 30 year fixed being at 6.86%, that is the highest interest rate since February. And monthly payments remain high. That's of course due to the elevated prices and also the higher interest rates. And households earning $75,000 a year, which is just below the median, can now afford only about 21% of listings nationwide. And rates near 7%, because I mean, we're right there at the threshold, they're keeping affordability very tight. But with more homes available, buyers are being more selective and negotiating harder. Now here's what you can expect during the summer. Economists are saying that you should expect home price growth to flatten or even slightly decline in certain regions. So that just basically means that, well, most, most economists are still expecting home prices to go up, but just at a slower rate. Or some are expecting a slight decline in prices. But that is the expected range. Now sales activity may pick up if mortgage interest rates ease. But we're going to talk more about mortgage interest rate expectations in just a second. So if inventory continues to build, then buyers are going to have more control heading into the summer. Now, if it does pan out like this, because of course this is just a forecast, if you're patient and pre-approved, then you may find more negotiating room in the upcoming months ahead. So this is the expected trend. Of course, there's no guarantee that it's going to happen. Now in terms of mortgage interest rates, I'm going to be very straightforward with you, and you're probably not going to be surprised by this, that it's become extremely difficult to forecast because of all the variables that are in play. So the mortgage interest rates are going to be correlated to the 10-year yield, right? But of course the 10-year yield, it's just being impacted by so many things. You're probably seeing it in the headlines. You probably frequently have seen it in the past few weeks. So it's going to be affected by instability in the bond markets. So right now the big headline is Japan, what's happening in the international bond markets. The tariffs, fiscal issues, you know, the big beautiful bill. You know, the debt market, it's also going to be affected by the Federal Reserve policies from the interest rate cuts to the bond buying program. That's probably something in the back half of 2025 or even early 2026. The economy as well. So are we going to have a recession, stagflation, or a soft landing? Of course, that's going to affect the debt markets and interest rates. And of course, inflation expectations. What is inflation going to be for the rest of the year? It's a wild card if you ask me. And also growth expectations, same thing. You know, what is growth going to be? And of course, that's going to affect the yields. So I am under the belief that taking all these factors into consideration, that we're not going to see a significant drop in mortgage interest rates in 2025. And I just want to throw this out there. There is the possibility, you know, of the worst case scenario. I wouldn't say worst case scenario, but this bad case scenario of happening of the 10-year yield actually rising. So I know that that is the last thing that a homebuyer wants to hear, but that's actually quite possible right now. So for my expectation on home prices in 2025, it's going to be the same thing that I forecasted in late 2024 and all of 2025, like so far, that it's going to be a boring year. No major price surges. And again, you know, I'm talking about the national median and no housing market crash. You know, home prices, they could fall by 2%, they could go up by 2% or flat. That is, if you want a range, that's my range, that is my expectation. But if the current conditions continue, then it's going to develop into more of a buyer's market and we're either going to see a slowdown in home prices going up, or they might even turn slightly negative. Now here's my recommendation to homebuyers. So what I recommended before, I would say it still stands. I said, keep shopping around for a good deal. And I understand that they are far and few, but if you find a good deal, I would buy a home in 2025. I would not wait to try to time the market and hope for a housing market crash. And you have to remember this, that the median price of a home in the US in 2007 was $257,000. That was the peak home price right before the crash. So if you held on to your home until now, then you're in good shape. So what I'm saying is that even if you bought back then at the absolute worst time possible, if you held your home until right now, you did great. And if there is no housing market crash, then you're just going to be kicking yourself in the years ahead for not buying this year. So that is your housing market updates. Please let me know what you think and I look forward to reading your comments. Please subscribe. I thank you for the support and I wish you a very nice day. Take care.