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The Shift in Today’s Real Estate Market: Farewell to the ‘Unicorns’

The Shift in Today’s Real Estate Market: Farewell to the ‘Unicorns’

Beautiful arabian mare horse unicorn running free on meadow during sunset

Comparing real estate metrics between different years can be challenging, especially in a normal housing market. The variability and unpredictable events can make such comparisons less meaningful or accurate. This is particularly true when comparing the current year’s numbers to the two exceptional years we recently experienced, which can be referred to as “unicorn” years.

“Something that is greatly desired but difficult or impossible to find.”


By using the less common definition of “unicorn” as something greatly desired but difficult or impossible to find, we can understand the significance of those years. The real estate market underwent profound changes due to the pandemic. The demand for homes skyrocketed as people sought properties with home offices and spacious backyards. First-time and second-home buyers flooded the market, taking advantage of historically low mortgage rates. Additionally, the forbearance plan helped prevent foreclosures, and home values reached unprecedented appreciation levels. These years represented an extraordinary market that was highly sought after but hard to find—a true “unicorn” in real estate. However, as we transition into the present, the market is returning to normalcy. The exceptional conditions that characterized the “unicorn” years have subsided. Therefore, comparing the current market to those years becomes meaningless. Here are three examples illustrating this point:Buyer Demand

Despite the headlines suggesting a lack of buyers, the reality is that the United States continues to sell over 10,000 houses daily. While buyer demand has decreased compared to the “unicorn” years, when examining the data from normal years (2017-2019), we can observe that buyer activity remains strong. This is evident when considering the graph below provided by ShowingTime:


[Graph of buyer activity comparing the current year to the normal years (2017-2019)]

Inventory Levels:

Another aspect to consider is the inventory of available homes. The “unicorn” years witnessed a shortage of inventory, making it challenging for buyers to find suitable properties. However, in today’s market, inventory levels have stabilized and are returning to more typical levels seen in the past. While it might not be as low as during the exceptional years, the current inventory can still meet the demands of prospective buyers.

Price Appreciation:

During the “unicorn” years, the real estate market experienced unprecedented levels of price appreciation. However, as the market normalizes, we can expect a more sustainable and moderate rate of appreciation. Although the rate may not be as remarkable as in the recent past, it aligns with historical norms, providing a healthier and more balanced real estate environment.
Comparing today’s real estate market to the “unicorn” years lacks significance. The market conditions during those exceptional years were unique and influenced by various factors. As we return to a more typical market, it is essential to assess the current situation based on historical data from normal years. By doing so, we can understand the underlying strength of buyer demand, inventory levels, and price appreciation in a more meaningful context.

Home Prices

We can’t compare today’s home price increases to the last couple of years. According to Freddie Mac, 2020 and 2021 each had historic appreciation numbers. Here’s a graph also showing the more normal years (2017-2019):

Foreclosures

There have already been some startling headlines about the percentage increases in foreclosure filings. Of course, the percentages will be up. They are increases over historically low foreclosure rates. Here’s a graph with information from ATTOM, a property data provider:

There will be an increase over the numbers of the last three years now that the moratorium on foreclosures has ended. There are homeowners who lose their home to foreclosure every year, and it’s heartbreaking for those families. But, if we put the current numbers into perspective, we’ll realize that we’re actually going back to the normal filings from 2017-2019.

Bottom Line
There will be very unsettling headlines around the housing market this year. Most will come from inappropriate comparisons to the ‘unicorn’ years. Let’s connect so you have an expert on your side to help you keep everything in proper perspective.

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