THE PAST DECADE HAS SEEN HIGHS AND LOWS

Ten years ago (2008) the real estate market was riding high on an unbelievable climb in home prices. By the end of 2008, we saw the real estate market crash because of irresponsible lending practices and irresponsible buyers. Many people lost their homes and jobs with the collapse.

By 2010, the market had hit rock bottom and started to slowly climb out of the valley. Investors began gobbling up homes at dirt cheap prices that they had not seen in several years. With confidence in a rebounding economy, buyers began purchasing affordable homes with historically low interest rates.

In 2014, the real estate market began gaining momentum. Home prices continued to rise with a low amount of inventory on the market and multiple buyers vying for the same home, driving up the prices of the homes. The economy was on the rebound as well, giving buyers and sellers confidence to move forward.

Fast forward to 2017, where home prices were rising higher than had been projected by economists. The inventory of homes on the market for sale were dwindling quickly, causing homes to sell fast, many homes receiving multiple offers. The economy was booming, unemployment rates were dropping and interest rates were still at a record low.

In January of 2018, after eight years of continually increasing home values, the second longest amount of time in United States history since World War II, economists projected a shift in the real estate market. Home prices had rebounded and the economy was still going strong. Interest rates slowly began rising as the unemployment rate set record low numbers. Home prices had finally rebounded to 2008 values in most areas and the majority of homeowners who held onto their homes through the crash were no longer upside down on their mortgages.

Homes were becoming harder to find and rumors of increasing interest rates on mortgages fueled buyer interest in finding a home before home prices reached the peak with historically low interest rates still in place. In June of 2018, the average home was going under contract in less than 30 days, many in less than a week. Multiple offers on homes continued to push home prices higher. The home values were rising quicker than projected by economists in the real estate industry. Economists knew that the boom could not last much longer.

By August, most parts of the United States were seeing a slight shift in home sales. The inventory of homes were at a historic low point, making it hard for buyers to find the right home with few homes from which to choose. Home prices had risen to a point that first-time home buyers (35 to 40% of buyers) were unable to find affordable homes. Unaffordability of homes and lack of inventory caused homes to stay on the market a little longer and multiple offers on homes were began to dwindle.

In July, I wrote a blog about the possibility of the market beginning to shift after 8 consecutive years of rising home prices. By the end of August, the real estate industry were starting to see homes prices begin to level out, appraisals started coming in lower, and more homes were staying on the market even longer. The longer a home is on the market and the few offers received, the lower the sales price of the home. After all, buyers ultimately determine the acceptable value of a home.

September continued the third consecutive month of a shift in the real estate market. The amount of homes under contract were lower than any of the previous months in the past year. Home sale values had leveled off and were no longer increasing or increasing slightly in most areas of the United States. The Northeast, Northwest, and Southwest areas were slower than the Southeast, but the Southeast was also showing signs of a slowdown.

The inventory of homes on the market had increased for the first time in many months, though there was still a very low amount of homes for sale on the market. New home builders were able to catch up with the demand of home requests and started building inventory homes again for the first time in ten years.

At the end of September, we saw a continuation of the real estate market dip continue for the fourth consecutive month. The economy is still going strong, unemployment rates are still very low, and employment income has not dropped, and mortgages are still being monitored strictly, so what is causing the shift? To find the answer, we have to look at what has changed in the past decade.


Inflation has continued to rise each year even though the average annual income has not risen much since 2008. Home prices have not become too high (they have just rebounded to the values of 2008). Interest rates have started to slowly climb, though they are still historically low. Everything else has risen in cost in the past decade, while home values have simply recovered. Think about it, you cannot buy a car, clothes, televisions, furniture, or groceries at the same price they sold for in 2008, yet the average income has not risen enough to keep up with inflation. Because the average income has not risen, home prices have likely hit a peak where they are no longer affordable enough to be purchased by the majority of buyers or the home prices are no longer attractive to buyers.

This shift is completely different than the crash of 2008. In 2008, the economy crashed in multiple sectors (real estate, banking, automotive) and unemployment rates were high. In October of 2018, the economy is still going strong and unemployment rates are still very low. This shift is likely more of a slow down in home values rather than a dramatic drop in home values.

The amount of homes on the market are slowly increasing, giving buyers a few more options from which to choose. Homes are also staying on the market longer, giving buyers a chance to view them before the homes go under contract. There are also very few multiple offers on homes, so the sellers do not have as much negotiation room to increase the sales price of the home.

In real estate, it is hard to predict exactly when or how long a shift will occur, just like trying to predict the stock market. It takes up to six months to know exactly when we hit the peaks and the valleys of the market. What we can track is the trends of the market. The last four months have shown a slow down of home sales and leveling off of home values. We do not know how long the slow down will continue, or if this is a slight hiccup in the market. The trend could continue a couple of months, six months, a year, or a couple of years. What we do know is that the market has shifted and has plateaued.

We are still a seller’s market overall, though every local area varies, because the inventory of homes is still low. Homes are still selling, though at a slightly slower pace (the average days active on the market is just over 30 days). Economists are projecting a 3% increase in home values through 2019. In comparison, home values increased 2 to 3% each quarter, on average, in most areas of the United States through 2017 and the first two quarters of 2018.

There is no need to panic. The market is not crashing and homes are not losing value, they are simply holding at their current value or increasing at a slower rate. Homes are still selling, though it is taking a little longer for them to sell. Buyers are still shopping for homes. The shift causes both buyers and sells to take a little different strategy in the market.

This change in market affects buyers, sellers, and investors. To keep up with the shifting of the market and how it affects your selling and/or buying power, consult with an educated Realtor, in your area,who is up to date with the current market trends and can advise you on the best options for you in the real estate market. If you are in my area, I just so happen to know one of those Realtors.

*Written and published by Ryan Odenweller with Keller Williams Realty.

You can reach me with questions and comments at (863) 271-7882 and Ryan.Odenweller@kw.com. Check out my website, RyanSellsFloridaHomes.com.

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