Is Housing Market Slowing Down

Are you in the market for a new house and wondering "is housing market slowing down"?  How do you even tell?

As a buyer should you even care?

What will a slow housing market do for buyers?

How do you even tell if a housing market is slowing down?

In this article we will look at the typical indicators that a market is slowing down, what it means to home buyers, and how you determine what your next steps should be.

Indicators of a Slowing Market:

While there is not really a definition of what constitutes a “slow market” generally speaking after reading many articles, a slowing housing market is when the number of sales in a given period of time decline. I suspect it is largely relative to the specific market or location.

There are several factors which can indicate a market has been slowing down. Keep in mind though, that all statistics track things that have already happened. They are sometimes known as “Trailing Indicators”.

These market indicators can start to paint a picture of the overall trend of the real estate market. The way a market is trending can give you an idea if it heading down or up. 

What are the factors which indicate a slowing market?

There is no real official definition for what constitutes a slowing market. In some ways the term slow or fast it is mostly relevant to when the current situation is compared to what happened previously (6 months or a year ago for example).

Here are some indicators which could give you an idea that a particular market  is slowing:

1. Increased Days on Market - If the average number of days a property remains for sale, before it is either sold or pulled off the market, is increasing (in other words it takes longer to sell).
2. Rising Inventory Levels - If the number of properties being added to a real estate market exceeds the number of properties which are being sold month over month. 
3. Reduced Demand - The number of people visiting properties or making offers is decreasing compared to the previous period.
4. Falling Prices - If people are reducing the asking price of homes faster or sooner than the previous period.

Any one of these by itself does not generally mean a market is slowing, but when you have 3 or 4 of the indicators showing up, then it is a good bet that the real estate market is slowing down.

Things could very greatly as well between segments of markets. For example, nationally things could be trending a certain direction while specific cities are doing the exact opposite. You really have to start with the big picture, but then continue to look at the indicators at a more local level.

Even if the market is slowing down in a particular city, there are always specific neighbourhoods which go against the trend because of their popularity or proximity to a major employer.

Always treat it as one more piece of information, rather than a crystal ball.

Real Factors In Decision Making?

Predicting the market, is like predicting weather. The information is only moderately useful at best. For example, if you are travelling to a new place for a weeks’ visit - you see the weather has been getting colder for that location the last few days, and rain on and off - the forecast is sunny and warm for the week you are there. You have two choices….you can trust in the forecast, or you can use the information of the previous week to pack a set of warmer clothes and a rain jacket…just in case.

Just because a market is slowing down for the last 3 or 4 months, doesn’t mean it will continue indefinitely. Although it could continue to trend that way for some time, it just depends on what the economic factors are behind it.

Does it really matter?

In my opinion, it is just information. It gives you an idea where things are, or at least where they were last month.

I would argue that the knowing what the Real Estate Market is doing (going up or down/ slow or fast) will tell you what challenges or opportunities you might encounter, though your decision of whether to buy or not would be more likely based around your own personal goals and financial situation.

It may affect your decision or ability to afford a home to a degree, however, it should be just one component of a more in depth research - it is a big decision after all. The more realistic information you can gather the better.

Where Can I get Information On the Real Estate Market?

There are a few organizations who produce regular statistical reports on the Real Estate market. It will be different in the USA and Canada.

These authorities provide data and analysis on the real estate market and are resources for identifying indicators of a slowing market in both the USA and Canada.

USA RE Market Information:

1. National Association of Realtors (NAR) - The NAR is one of the most influential organizations in the U.S. real estate industry. They regularly publish reports and data related to housing market trends. Their reports include information on home sales, inventory levels, median home prices, and affordability indexes. They are widely recognized for their insights into the U.S. housing market.

2. Zillow Research - Zillow is a prominent real estate platform in the United States. Their research division regularly publishes reports and articles on housing market trends. They analyze data on home values, rent prices, days on market, and other key indicators. Zillow's research is a valuable resource for understanding market dynamics.

3. CoreLogic - CoreLogic is a global property data and analytics company with a strong presence in the U.S. real estate market. They provide data and insights on property prices, mortgage delinquencies, and various real estate market indicators. Their reports are used by professionals and researchers to track market conditions.

Canadian RE Market Information:

1. Canada Mortgage and Housing Corporation (CMHC) - CMHC is a federal agency in Canada that plays a central role in housing research and policy. They provide comprehensive data on housing starts, home sales, and rental market statistics. CMHC's reports are authoritative sources for understanding the Canadian housing market.

2. Canadian Real Estate Association (CREA) - CREA represents real estate professionals across Canada. They offer market analysis, including reports on home sales activity, average home prices, and housing inventory levels. CREA's reports are widely followed by those interested in the Canadian real estate market.

3. Royal Bank of Canada (RBC) Economics - RBC is one of Canada's largest banks, and its economics division regularly publishes research on various economic indicators, including the housing market. They provide insights into mortgage rates, housing affordability, and regional market trends. RBC's reports are respected for their economic analysis.

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