Home Sales Hit the Skids

We all know someone who bought or sold a house in the last four years and was shocked by how much they made or how much they paid. The pandemic unleashed a desire to move like we hadn't seen in a couple of generations. In comparison, you would have to go back to 2005 and 2006 to see similar home sales—a period falsely propped up by the subprime lenders handing out mortgages like they were Big Macs. (Perhaps it was even easier since it requires money to buy a Big Mac.) In 2005, a home loan was available regardless if you had money or even a job. Loose lending, however, was not a factor in the run-up in home sales during the pandemic. It was a strong desire to move to a different state or downsize because of jobs, retirement, or the lockdowns.

Source: National Association of Realtors © Statista 2024

All things must come to an end, and ultimately, rising interest rates played a huge role in tamping down home sales, but the higher prices driven by higher demand also played a significant role. Would-be home buyers today are in a holding pattern because they can't afford the mortgage on a house they want, and home sellers are frozen because they cannot give up their 3% mortgage for a 6% mortgage. There are effects of this kind of downshift in home buying. There are those obviously affected, like residential realtors and title companies, but also those indirectly affected, like self storage owners and operators.

In next week's blog, we will dive into how home buying affects self storage.

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