The ‘Unicorns’ Have GONE: A Return to Normalcy in the Real Estate Market

Comparing real estate metrics from one year to another can be challenging in a normal housing market. When you add in the ‘unicorn’ year – the pandemic years – it makes comparing the housing market to what we have experienced over the past few years almost impossible.

The pandemic immensely changed the real estate landscape over the last few years. The demand for a home of one’s own skyrocketed, driven by the need for home offices, and large backyards. In addition, first-time and second-home buyers entered the market, mortgage rates hit a historic low, and we witnessed home values reaching unprecedented appreciation levels. It created a market that had forever been “greatly desired but difficult or impossible to find” – a ‘unicorn’ year.

However, comparing today’s market to those ‘unicorn’ years isn’t a good idea and here’s why. If you’ve seen the latest headlines about real estate, you might assume that there aren’t any buyers. According to ShowingTime, buyer demand is still stronger than it was in the years prior to the pandemic. Although comparing the pandemic years to today will naturally show a drop in buyer demand, it remains higher than in prior years.

Comparing today’s home price increases to the last couple of years is equally fruitless. In 2020 and 2021, the housing market experienced historic high appreciation numbers. In today’s market, we can observe that home appreciation values are returning to more normal percentages.

Due to pandemic forbearance programs, foreclosure rates all fell - - on average below 350,000 each year; whereas in previous years, the average was closer to 560,000. While there may be an increase in foreclosure filings, putting the current numbers into perspective shows that we’re returning to relatively normal filing levels from previous years.

This year, there will continue to be unsettling headlines around the housing market. Many of these headlines will draw comparisons to the ‘unicorn’ years but it’s important to recognize that they might create a misleading impression that isn’t necessarily accurate. At DwellHop we’re here to help assist you with your buying or selling needs, as well as serve as a valuable resource for expanding your knowledge of the housing market. And, if we happen to come across a unicorn or two, you’ll be the first to know!