March Economic Update

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Those of us in the industry have been saying this market is “crazy” for a few months now, and we’re not wrong. Here is one small example of the crazy – a house in Citrus Heights, California was so popular, they had 122 offers on the home. That’s not a typo. I didn’t mean to type 12 and accidentally dropped in a second 2 and my editing team missed it. There were literally 122 people who wrote offers on that home, read more about it here

Here is the thing that doesn’t get talked about as much as it should, 121 people lost in that bidding war. That means 121 families had already thought about which kid would get which bedroom, mentally placed their furniture in the rooms, and thought about how they would set up the master bedroom. That means 121 families lost out on “their house” and this example isn’t an outlier with similar stories popping up across the nation.

A lot of emotion goes into writing an offer. One has to really feel like it’s their house, the place they want to call home. In this instance, 121 people got that taken away from them the day after presenting their offer.  

I understand the market doesn’t care. I can hear some economic folks saying “it’s just supply and demand.” I get that, I’ve been looking at the markets and more specifically the real estate market from an economic point of view for 21 years now. However, maybe because I am not an economist, I don’t just think in supply and demand, I think about the people behind those graphs.  

Normally when I am crafting this monthly Marketing Minute, I like to point out solutions and help people decipher what is going on in the market. To be honest, I think the ultra-tight inventory market is going to be our new normal for 18-24 months. I just don’t see a solution for the supply side of the problem.  

The solution seems obvious – just build new homes. I’m sorry to report the U.S. is actually slowing down building as a downside hedge for construction cost spiking and the opportunity cost of selling something cheaper today than they could in six months, an article on that is here.

What about resale you may ask? No good news for “more houses” either, that number has been down 6.6% month over month. As of the end of February, housing inventory is at a record low of 1.03 million units. That’s down a massive 29.5% and you guessed it, also a record low. 

What can slow down the craziness? Affordability. I’ll share more on this in a future Market Minute, but let’s just take a moment and honor the buyers going through what they’re going through in this market. Let’s think about those 121 people who didn’t get their house. Some of those people had to tell their kids, “Sorry, little one, we didn’t get the house.” Others had to have the same conversation with their parents and friends.  

We’ve been talking as a company about not calling it “crazy” anymore, since the word doesn’t really honor the buyer side of things right now and what they go through. Maybe we’ll call it “intense” or “requiring focus and fortitude.” I am not sure, but just labeling it “crazy” doesn’t feel fair to the 121 people who lost their dream house.

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