Hey, I need to know what the real estate market’s going to do for the remainder of the calendar year and maybe for the beginning of next year? We’re going to talk about that right now and give you the 2021 end of the year update and beginning of next year, my forecast in what I kind of believe is going to go on.
We’re going to talk about is there going to be a seasonal slowdown? That’ll be the first thing we talk about. Are we going to have a strong year compared to last year, compared to normal type years? And, you know, where does that kind of lie? And we’ve already had a huge, huge boom.
Are we going to drop back? What’s going on here? Right. And how our home prices are appreciating right now. So let’s kind of start here at the top and get some prognostication, prognostication, prognostication. I don’t know.
I don’t know exactly how to say that word of one of those times. Maybe I said it right. And you can do so. Seasonal slowdown. Is it going to happen? So we have each year we have the high times when people buy homes.
So if we look at the whole calendar throughout the year, there’s 12 months in a year and there’s going to be months where we sell more homes than others every single year. And that’s the seasonality of the real estate business. Right. So if we typically look, we’re going to sell less homes around the busy holiday season.
So we’re not going to sell as many oddly around like Thanksgiving and a little bit before that is going to be a little bit of a slow time. And then we’re going to slow down between Christmas and New Year’s is going to be a slower time historically.
And then there’s going to be boom times when it’s a little bit busier. So that’s going to be is right before school gets out because people are starting to list their homes. And we’re going to have a lot of listings come up because people want to move at the end of the school year before it gets too hot.
So if you think about here, right, moving in the summer, it’s easier to move in the shoulder seasons to move in the spring or in the fall. So if you move early, then you kind of avoid some of the heat. So for some people, that definitely helps them out.
So early spring, we see a lot of homes into early summer get listed. And then we also see a bunch of them once people go back to school. So we’re going to see a little bit of a, you know, an uptick right now. We saw it drop back when people went to school, like for the first week. And just before, because they’re kind of going around. They’re shopping for new clothes.
They’re bringing the kids or getting them ready. They’re doing school shopping. There’s back to school tax free type things. There’s a lot of other items going on. Right. So the question for 2021 is, are we going to have a seasonal slowdown? And the answer is, yes, we do every single year. Right. So what we have is we’re not going to be as busy in the fall as we are in the summer.
So that’s called seasonality as it relates to real estate. Now, the bigger question is the seasonality of this year, if we’re to look at what we’re looking for the rest of the year. How is that going to compare to previous years? Or a typical or normal year? So I believe that we’re going to be up above a normal year.
So if you look can take a 10 year average of where we are and how many transactions go through. We’re going to be above that for the rest of the year, but not as far as we were obviously in the summer. So that’s kind of what we have going on. I don’t see a huge bust anytime soon. I do see a continued ramp up as the prices and all those things have been stabilized.
We still don’t have the right inventory back yet. So what we have with an inventory issue is it comes down to supply. And then conversely, demand and price of supply and demand, and they play opposite each others. And what we have right now is we have a supply problem. We don’t have enough homes to satisfy the market. And we are really, really short.
We’re approaching one month of supply. A balanced market is when we have six months of inventory. So right now, we have one. Normal is six. And that would be a totally balanced market. We have too many buyers that want to buy homes and too few sellers.
Now, it’s not is super short supply is when we had like weeks worth of inventory and it’s starting to catch up. And the home builders, as they’re bringing homes on in new starts, are going to catch up a little bit.
Right. But it’s still going to take us a period of time now. Price appreciation. We’ve had double digit price appreciation without any question for a little while now. Right. So we’ve been going up by more than 10 percent on an annual basis, and that is a little scary.
So if we look at that and analyze what’s going on there. Your home typically over a long period of time, if we look out over a 20, 30 years and see what goes on with a home, it typically appreciates like a bond or like inflation, and your home would go up by, I don’t know, three or four percent annualized over that extended period of time.
So now we kind of look out and we’re like, all right, fine homes go up by two, three, four percent over a period of time. Treat your house as a bond, that it’s safe, secure, and it goes up. Now, there’s going to be ups and downs. But if we look at it over a 20 or 30 year time frame, we’re going to be up that much annualized. Now, recently, we just went up by a bunch.
So how scary is that when you go up by this big number? Right. Because when you go up by a big number than you think. Followed by that has to be a big crash. But we have some new information. So let’s kind of look at what we have on why we had this huge run up.
And let’s talk about how we had like cataclysmic events that went on. Right. We had big things. We had items go on in our world recently that when we look back on it and we look at the housing, what has happened with how much people can move and where they can work from, and this whole work from home revolution, the whole push towards a little bit more rural that we’ve seen here. And we all know why that’s taking place.
Right, with the virus. So what we have here is something in our industry that we’re going to look at worldwide, and it’s going to be as big of a thing as an industrial revolution that previously happened.
So future generations and you know, when we get 20 years out, 30, 50 years out and look at it this time frame right now, we’re going to see was a lot about the virus and about how using technology and advancements in medicine advancements, all those things tied together. But housing is going to be a big, big part of it.
So we had this big shift and it was a paradigm shift where people wanted different items. So in doing that, I don’t see us stepping back on the prices. That has kind of locked in where there were holding. So I don’t see that we have to drop off like a cliff on the prices. They can kind of stay where they’re at and now go the three or four percent from here.
Are we going to have a setback at some point in the next couple of years? The answer is it has to and it will. However, if we look over the long term, we might see when we look out over a 20 or 30 year time frame that we’re more hit for going forward and maybe two that we were in the past. So we might see a little bit more of this. But does that mean inflation?
Well, I don’t know. Possibly so. But it’s one of those things that we kind of have to balance. So inflation, home prices and appreciation, they kind of all let go together, and that’s about it. So for the rest of the year, we see plenty of goodness.
And beyond being totally fine, I do not see any huge corrections or any big massive drop offs. If any of your clients are asking you any information about that, I hope I gave you enough tools to be able to combat and discuss this in a fairly intelligent manner with your clients. If they ask you, is now a good time to buy or sell? And the answer to that question is always yes, regardless of what they’re doing.
Right, because people have to move and there’s things that they want to do. And, you know, is it good? Yes. We get more. Yeah, sure. Like there’s always the answer is always. Yes, that we can find the right thing for them. And it’s better off to get into the home that works best for them, whether it’s closer to the place they want to be, whether it’s the right size.
The answer is yeah. Now is a good time. Would we care for you and we’ll do the right thing and get you into it. So regardless of prices are up or down, interest rates, whatever they happen to be, there’s always a picture that we can paint that the answer is yes. Now is a good time to either buy and or sell.