Addressing Consumer Fears: Hot Sheet Recap

Housing inventory saw a slight uptick from the week prior, but it is still trending for the lowest new listing data of all time, according to Housing Wire’s Housing Market Tracker. 

With that in mind, let’s get into this week’s Hot Sheet recap. Host Byron Lazine discussed ways agents can address consumer fears during today’s complex market— whether discussing home prices, consumer sentiment or commercial real estate investments.

Home Price Peaks

In a recent Lance Lambert post, he shared a chart that shows the number of months that have passed since U.S. home prices set an all-time high. 

After peaking in 1990, the next all-time high for U.S. home prices came in July 1993—37 months later. 

In 2007, after home prices hit an all-time high, it took until 2016 for a new all-time high to occur. 

Right now, the market hasn’t hit a new all-time high for home prices in seven or eight months, depending on what data you are looking at. 

Looking at historical data, we see that this could last for an extended period of time.  If it were to take 37 months before the next all-time high (like it did in the early 1990s), then buying right now would mean you’re buying below the next peak price point. 

Many housing economists are projecting home prices to tick up over the next year, which means the next all-time high could be months out. Thinking long-term and showing buyers what has happened historically with peak prices can help them make informed decisions.

Watch the breakdown of home price peaks here. 

Consumer Sentiment at an All-time Low

According to this year’s Gallup poll, consumer sentiment about the housing market is at an all-time low, with just 21% of Americans thinking it’s a good time to buy a house. 

This is down from 30% in 2022. Readings for 2022 and 2023 stand out as the only two years with less than 50% of U.S. adults perceiving a good market for buyers. So even for home buyers continuing their home search, the majority of the voices around them are filled with negativity toward the housing market.

Today’s market can be extremely discouraging, especially for buyers who have been searching for a long time. Byron shared another Lance Lambert chart that illustrates how, when homeowners stay in the same property for 7-10 years, they have come out with increased equity for the past four decades. 

When you are speaking with consumers ready to give up, lead the conversation with positivity and empathy—and back up your conversation with data like the chart above. 

Watch the breakdown of consumer sentiment here.

Commercial Real Estate Prices

While the residential real estate market remains complex, the commercial real estate market is faltering. Commercial real estate prices in the U.S. fell for the first time since 2011.

The decline was slight—less than 1%—and was led by drops in multi-family residences and office buildings. 

The decline in office buildings likely doesn’t come as a surprise, with the continuation of remote work, coupled with stress in the banking industry. However, many people continue to look at investing in multi-family properties. As more apartment buildings and larger multi-family units are being built and coming to the market, this could be a risky investment.

If you are advising someone who is looking to invest in multi-family investing, ensure you have the data for your local market. Because, as Mark Zandi from Moody’s Analytics says, “A lot more price declines are coming.” 

Watch the full breakdown of the commercial real estate market here.

For more industry news, look back at this week’s Hot Sheet episodes.