AriZona Real Estate insider!

Hey there! If you’ve been watching the housing market lately, you’ve probably noticed things are looking pretty bleak. It feels like we’re reliving 1978, but without the disco vibes and bell bottoms. I’m just another Realtor who might or might not have dropped out of Arizona State University in the Phoenix metro area trying to make sense of this mess like all of y’all. And let’s get one thing straight right off the bat—we’re in a housing recession, not a housing bubble. Here’s why existing home sales are hitting rock bottom and what it means for all of us.

Stuck in a Time Warp: Existing Home Sales Nearing 1978 Levels

Picture this: in 1978, existing home sales were around 4.09 million. Fast forward to 2024, and we’re expecting home sales to hover around 4.1 million. That’s with a population that’s grown by nearly 100 million since then. We’re stuck in the past while everything else has moved on, and this stagnation is dragging us down.

Goldman Sachs’ Predictions: The Long, Sloggy Road Ahead

The financial whizzes at Goldman Sachs are telling us to brace ourselves because the housing market isn’t bouncing back any time soon. They forecast existing home sales will only inch up to 4.5 million by 2027. During the pandemic housing boom in 2021, we saw a peak of 6.1 million sales. In 2019, we were at a healthier 5.3 million. Clearly, we’re not on the fast track to recovery.

Here’s what they’re projecting:

• 2024: Home sales around 4.1 million.
• 2027: A slow rise to about 4.5 million.
• 2024: The average 30-year fixed mortgage rate could drop to 6.5%.
• 2025: It might ease down to 6.3%.
• 2024: Home prices are expected to rise by 3.8%.
• 2025: Anticipate a 4.4% increase.

This is Not a Housing Bubble: Understanding the Recession

Let’s clear up a common misconception—this is not a housing bubble. In a bubble, rapid price increases and speculative buying lead to a sharp collapse. What we’re dealing with now is more like a slow deflation. Prices aren’t inflating out of control; instead, people are pulling back because they can’t afford the current rates or don’t want to give up their low mortgage rates. It’s more of a slow leak than a dramatic burst.

The Lock-In Effect: Caught in a Mortgage Bind

A major reason we’re in this rut is the lock-in effect. Homeowners with those fantastic 3% mortgage rates from the boom years are holding onto them for dear life. Faced with the choice between a 3% rate and a 7% one, most would choose to stay put. This means fewer people are selling, leading to fewer transactions and stagnant sales numbers.

Housing Affordability: The Mirage in the Sonoran Desert

Housing affordability right now is like spotting a mirage in the Sonoran Desert—just out of reach. Prices are sky-high, mortgage rates are through the roof, and wages aren’t exactly keeping up. For most people, buying a house feels like chasing a pipe dream, and even selling isn’t worth the hassle unless you can score a great deal.

The Fed’s Need Make Move

Even with my background, it’s clear the Federal Reserve needs to act. With the economy softening and the housing market showing serious signs of stress, cutting rates should be on the table. If they don’t step up, this recession could drag on longer than any of us want to imagine.

Why You Should Care

You might wonder why any of this matters. Well, a sluggish housing market has more impact than just fewer “For Sale” signs:

• Economic Growth: Housing is a huge part of the economy. When sales slump, so does overall growth.
• Job Market: Fewer home sales mean fewer jobs in construction, real estate, and related fields.
• Personal Wealth: For many, their home is their biggest asset. When the market’s down, personal wealth takes a hit.

Our Take: Bring Back Bell Bottoms, Not 1978 Home Sales

Honestly, I’d rather see bell bottoms make a comeback than these dismal home sales numbers. We’re in for a rough ride unless something changes fast. Buyers and sellers are stuck in a holding pattern, and without serious intervention, we’re looking at a long, tough recovery.

What’s Next?

If you’re trying to navigate this crazy market, hang tight. Keep an eye on trends, hope for better rates, and let’s all pray the Fed is paying attention. Whether you’re looking to buy, sell, or just survive, stay sharp and keep your wits about you. It’s a bumpy road, but we’ll get through it.

Understanding the Data: Insights from Lance Lambert

To get a clearer picture of the housing market, it’s crucial to dive into the data. Lance Lambert’s analysis, available at resiclubanalytics.com, provides invaluable insights into the entire report of housing numbers. With Lambert’s expertise, we can better grasp the trends shaping the market and understand the factors driving existing home sales to their current lows.