Accumulated supply suddenly pops up – those vacant homes that no one thought of as empty.
Through Wolf Richter in front of WOLFSTREET†
For the past two years, the story was that there was no inventory for sale, that there was a housing shortage and that is why prices rose. Then there were other people like me who pointed out time and time again that people weren’t putting their old house on the market after they bought a new one, and that these people now owned two or three houses and that they were going to have the hottest real estate market ever. climb where prices rose 20% or 30% or more a year, and then they would sell those vacant homes that no one ever counted as empty.
And because they already lived in a home, they were able to sell their vacant home without having to buy another home. This is the ‘shadow stock’ that is now entering the market, just as mortgage rates have risen and sales are plummeting. And to get things moving, the price cuts are ramping up.
Bottled up supply, declining sales: it’s just the beginning, but it will happen.
Active listings have increased up 20% in June from May and 19% from a year ago, the second year-over-year increase in a row, after an 8% jump in May, and both were the first year-over-year gains since June 2019. were about 98,000 Lake homes for sale in June than a year ago, according to data from the National Association of Realtors today (data on realtor.com†
Active listings have increased for two reasons:
ONE, June Sales Dropped 16% YoY, after the 12% drop in May and the 9% drop in April, as potential buyers lost interest in skyrocketing home prices and holy-moly mortgage rates. These are offers at different stages of the sales process, but before the deal closes. June was the tenth straight month of year-on-year declines. In June, the NAR had reported that “closed” sales in May also fell for the 10th straight month† And this doesn’t bode well for closed sales in June:
TWO, new listings soared in June up to 562,000 homes, the second highest in June in recent years, after only June 2019. And interestingly, new offers rose in June, while in normal years they peaked in May and fell in June. I circled the previous June (data via makelaar.com).
Price reductions peak by 50% in June from May and about doubled year after year as sellers try to get buyers to show up and take a look as visitor numbers have dwindled and the bidding wars subsided into fond memories. This is a sudden reset. But more sellers are coming to grips with a new reality: Prices should go where the buyers are, and buyers are somewhere close, but they’re a lot lower (data via realtor.com):
Holy moly mortgage interest — so named because people say it between their teeth when they first see the mortgage payment on a home they want to buy — hover around 6% for a 30-year fixed-rate mortgage, about double what they would be in 2020 had been (data via makelaar.com).
This type of mortgage rate, which has doubled not too long ago, and house prices that have risen 40% or more in the same two-year period, make for a toxic mix. Something has to be given, and it won’t be the buyers – because they can’t, they’re in it – but the sellers. Or there is no agreement.
And buyers who could buy, the notorious money buyers, they? do not want buy at those prices too, now that the madness is hissing out of the market. No one wants to overpay on the insane peak of what was a totally crazy market.
Huge difference in lists between the 50 largest metros.
Of the 50 largest metropolitan cities, the number of active listings peaked in June in Austin (+144% year-on-year), Phoenix (+113%) and Raleigh (112%). In 31 other metros, active entries rose by double digits. And active listings fell in just a handful of subways, led by Chicago (-13%), Virginia Beach (-14%) and Miami (-16%).
The table is sorted by year-on-year percentage change of active listings (data via realtor.com):
|Largest metros, active offers, June 2022||% Change YoY|
|Austin-Round Rock, Texas||144%|
|Raleigh, North Carolina||112%|
|Salt Lake City, Utah||98%|
|Riverside-San Bernardino-Ontario, CA||72%|
|Dallas-Fort Worth-Arlington, Texas||62%|
|Tampa-St. Petersburg-Clearwater, Florida||56%|
|San Antonio-New Braunfels, Texas||54%|
|San Francisco-Oakland-Hayward, CA||46%|
|Las Vegas-Henderson-Paradise, NV||45%|
|Oklahoma City, OK||37%|
|San Jose-Sunnyvale-Santa Clara, CA||34%|
|Orlando Kissimmee Sanford, Florida||31%|
|Kansas City, MO||28%|
|Birmingham Hoover, AL||26%|
|San Diego-Carlsbad, California||25%|
|Atlanta-Sandy Springs-Roswell, Georgia||23%|
|Louisville/Jefferson County, KY-IN||22%|
|Los Angeles-Long Beach-Anaheim, CA||20%|
|New Orleans-Metairie, LA||16%|
|Buffalo-Cheektowaga-Niagara Falls, New York||13%|
|Houston-The Woodlands-Sugar Land, TX||10%|
|St. Louis, MO-IL||5%|
|New York-Newark-Jersey City, NY-NJ-PA||0%|
|Minneapolis-St. Paul-Bloomington, MN-WI||0%|
|Rochester, New York||-4%|
|Milwaukee-Waukesha-West Allis, Wisconsin||-4%|
|Virginia Beach-Norfolk-Newport News, VA-NC||-14%|
|Miami-Fort Lauderdale-West Palm Beach, Florida||-16%|