May 2023 Real Estate Market Update

May 12, 2023

All Real Estate News

The text "Hello May" surrounded by flowers. This image likely represents a blog post or a greeting for the month of May.

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Housing inventory chart shows today at about three months, in the sellers’ market range below six months.

 

We have recently seen positive movement in home prices, and one reason for this is the lack of inventory. Over the last several years we've been in a seller's market, and we are still there today.

 

Chart of U.S. foreclosure filings, declining from 676,535 in 2017 to 324,273 in 2022.

 

And, although some frightening headlines are floating around that we are seeing dramatic increases in foreclosures, it is important to put that into perspective. Taking a look back at the last “normal” years in the real estate market (2017 – 2019), we can see that we are extremely short of the average foreclosure numbers of those years. Of course, as we come out of the moratorium, we will see foreclosures rise. No doubt. But not at the rate that's going to dramatically impact inventory and shoot us up into a buyer's market.

 

Line chart of U.S. foreclosure filings, peaking around 2009, falling sharply by 2020, then rising through 2023.

 

The peak seen here was during the 2008 housing crisis where we saw over 9 million distressed homes. In the first quarter of this year, we saw 95,712 foreclosure filings.

 

Another scary headline is the speculation of a recession. In the Fed’s recent meeting, they determined that, in light “of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year...” 

 

So, how would a recession impact housing? Typically, during recessionary times, the Fed lowers the interest rates in an effort to incentivize people to spend money in order to simulate the economy.

 

Bar chart of home price changes during six recessions, with the largest decline in 2008 at 19.7%.

 

How would a recession impact home prices? Historically, during 4 of the last 6 recessions (going all the way back to 1980), home prices rose.  

 

Bar chart comparing mortgage rate changes during six recessions from 1980 to 2020.

 

How would a recession impact mortgage rates? Looking back at those same 6 recessions, mortgage rates have fallen.

 

Chart of existing mortgage rates in Q4 2022, with 3.01–4% the largest category at 38.5%.

 

Overall, the current housing market is strong. First, because of the current rates on existing mortgages. Over 80% of mortgages have a mortgage rate below 5% - a very strong foundation for homeowners.

 

Pie chart: 28.9% of mortgaged homes have over 50% equity, 32.4% under 50%, and 38.7% are owned free and clear.

 

Second, because of the tremendous amount of equity across the country. Almost 40% own their home free and clear, and almost 30% have at least 50% equity. That’s amazing.

 

Finally, here are the latest numbers for how we closed out May in Tallahassee. 

 

Tallahassee MSA single-family home market infographic for May 2023, with sales, prices, inventory, listings, and pending sales.

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