Why are people on the move?

According to the U.S. Census, Americans are on the move, with 8.7% of the population changing their environment in 2022 alone. Why? There are a number of factors. The aspiration to move from renting to owning is part of everyone’s home dreams. Proximity to family is also a critical component, especially with the cost of childcare. And of course, housing affordability and the cost of living are also huge factors.

It’s interesting to note that young people and seniors are the most motivated demographics to move, and for many of the same reasons like new jobs and career opportunities. Check the numbers for additional insights.

Bay Area tech layoffs hit 20K

More than 20,000 workers in the tech sector have lost their jobs in the past 6-8 months, and you more than likely know someone who’s been affected. According to a Mercury News report, open listings are down as much as 53% from pre-pandemic times for software positions and 37% for IT roles. But while some tech giants are downsizing, they’re still bigger than they were before COVID.

Chic vs. Geek: Summertime Silver Linings

Amidst news of rising interest rates and supply shortages, there are opportunities to find silver linings in the housing market. Let’s take a look at a few examples:

CHIC (PEARL)

One piece of good news for potential buyers is that banks should get faster and more efficient at processing loan applications, especially with a sharp drop-off in re-financing due to rising federal interest rates.

Another positive is the job market. Prior to the pandemic, we were already experiencing high unemployment — and under-employment — and the COVID shutdown took it to record levels. Today, there are two jobs available for every unemployed American. That means more people with the potential to buy, especially first-time buyers.

And while supply chain breakdowns have left some store shelves empty, many retailers are overstocked in some goods, leading to sales and discounts for savvy buyers.

GEEK (KEVIN)

If the Fed's goal was to bring down prices, it’s working. Following spikes of 20% or more in the past 12 months, the volume of price adjustments off super-high prices is now up 69% compared to May 2021.

In a cooling market, buyers also have more choices and opportunities. Over the past year, we’ve seen as many as 10 bidders on a single property, making it hard to score the home you want. Now, inventory is up an average of 8% over last year in many parts of the country — including the Bay Area — which means prices could continue to drop.

And if you’d rather build your dream home — and who wouldn’t? — lumber prices have fallen roughly 56% off this year's highs, and copper is down 18.3%.

Number Talk: Confluence of Economic Indicators

The three charts below show how real estate market cycles generally move in sync with other economic indicators such as financial markets, employment, and consumer confidence.

It’s important to note that these data points end in 2019 and don’t reflect the crazed volatility created by the global pandemic. As we’ve all seen, the housing market has experienced a complete rebound, but some economic sectors are still struggling to recover.