Call Our Offices
Your Money.
Your Life.
Your Way.
Time to be a Contrarian on the Housing Market?
Shared by Strong Valley on December 14, 2020
Housing Market Snapshot - Strong Valley
Image of a stop watch for the in-brief section heading
Here's a quick look at what's in this article:

According to the National Association of Realtors, existing-home sales grew for the fourth consecutive month in September as each major region saw month-over-month and year-over-year gains, with the Northeast seeing the biggest jumps.

Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

Sometimes, when most people believe the same thing, a big change is on the way. That thinking is known as contrarian. The housing market may be primed to give us a big lesson in contrarianism. If so, that’s not-so-good news for homeowners and real estate investors.

Contrarian theories abound concerning the herd mentality of investors. You could argue it was as much of a death note for the market as for an athlete featured on the cover of Sports Illustrated. 

We are not too terribly worried when we see only one article of this nature. But when the topic appears in many news articles, it is a potential red flag, although not a guarantee that anything will happen. The psychology of the cover curse is that, by the time something is the conventional wisdom and graces magazine covers, it has peaked.

The same contrarian thinking could be applied to the housing market, which by all accounts is sizzling in 2020.

Existing Home Sales

According to the National Association of Realtors, existing-home sales grew for the fourth consecutive month in September as each major region saw month-over-month and year-over-year gains, with the Northeast seeing the biggest jumps.

Home Sales Snapshot

Here are a few highlights:

  • Total existing-home sales rose 9.4% from August
  • Overall sales rose 20.9% year-over-year
  • The median existing-home pricefor all housing types in September was $311,800, up 14.8% from a year ago
  • September's national price increase marks 103 straight months of year-over-year gains

Heading Towards or Already in a Bubble?

The highlights above paint a robust picture of today’s housing market and whether we’re headed for – or are already in the midst of – a bubble is really anyone’s guess. Unfortunately, we usually don’t see a bubble until it has already popped.

But consider some of the other statistics from the NAR:

  • Total housing inventory at the end of September was down 19.2% from a year ago
  • Unsold inventory sits at 2.7-months, down from 4-months a year ago
  • Sales in vacation destination places have seen a 34% year-over-year gain in September
  • Properties typically remained on the market for 21 days in September – an all-time low
  • 71% of the homes sold in September 2020 were on the market for less than a month
  • Distressed sales – foreclosures and short sales – represented less than 1% of sales in September

Bubble, Bubble, Bubble?

Remember the “Location, Location, Location” mantra preached by realtors everywhere? Well, look at what the four major regions in the U.S. have experienced:

  • In the Northeast, existing-home sales jumped 22.9% from a year ago and the median price leapt 17.8% from September 2019
  • In the Midwest, existing-home sales skyrocketed 19.8% from a year ago and the median price increased 14.8% increase from September 2019
  • In the South, existing-home sales ballooned 22.3% from a year ago and the median price was up 13.0% from September 2019
  • In the West, existing-home sales are up 18.1% from a year ago and the median price increased 17.1% from September 2019

 So, Now What?

While home prices continue to soar, interest rates are at historical lows and inventory is tight, remember when someone says: “this time it’s different.”

Because nothing goes up forever.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results or even estimates of actual returns a client may achieve. This information is designed to provide general information on the subjects covered. Consult your financial professional before making any investment decision. Opinions and estimates offered are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. Please see other important disclosures related to

Your turn – What would you like to know about Time to be a Contrarian on the Housing Market??

Strong Valley wants to provide useful and meaningful information to our clients, to our professional network, and to the broader community of people we serve. We’d love to hear your questions about Time to be a Contrarian on the Housing Market? or about any other topics you care about. You can call our office directly, or use the contact form below to send us your questions and/or suggestions.  And if you found the information helpful or entertaining, we hope you'll share the Strong Valley story with others.

We love to hear your questions, ideas, and feedback!

  • This field is for validation purposes and should be left unchanged.
Copyright © 2024 Strong Valley Wealth & Pension, LLC
Investment advice offered through Integrated Partners, doing business as Strong Valley Wealth & Pension, a registered investment advisor. The information on this website has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Registration as an Investment Adviser does not imply a certain level of skill or training. Strong Valley Wealth & Pension, LLC offers some securities through M.S. Howells & Co. Member FINRA/SIPC. M.S. Howells & Co. is not affiliated with Strong Valley Wealth & Pension.
The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.