Does the Slow Down in Real Estate Sales Hurt Anyone Outside the Real Estate Business?

Today, the report about existing home sales came out, and the numbers were off. Of course, it wasn’t surprising to see. It got me thinking about a few things that I want to point out:

Economic Value of a Real Estate Transaction

First, according to the National Association of Realtors, on average every real estate transaction that happens results in about $80,000 of revenue towards to the local economy. There’s a lot that goes into it… fees, vendors, movers, cleaners, contractors, and anyone else involved in the transaction.

The year-over-year change in existing home sales (carving out new home sales, which is over a million per year), this unit change is about 830,000 homes that didn’t sell from the year before. Do the math:

• 830,000 homes x $80,000 per transaction = $66 Billion

That’s a significant amount!

Last year was also a bit of a slower year. So, let’s compare to 2001. From 2001, that’s a change of 2.6 million units. Which works out to be $209 Billion – which is just about 1% of GDP. So, these numbers start to get significant.

You can see that the lower number of home sales can have an impact on the lives of millions of people.

Why Does it Matter?

Why does all this matter? The Fed is trying to make it sound like the economy is booming – but when I look at just 1 sector (real estate) the situation is clear. There’s no question that other industries are being affected. For example, everyone knows that there is a technology recession as well (the only thing propping it up is AI).

Just a 1% change in GDP from the real estate industry is a huge difference.

What I am saying is that it matters a lot to the entire economy when things are slow in real estate. Also, we need is to get The Fed to start to realize that the economy might not be what they are thinking right now. Real estate is just one example of that. There’s no need to continue increasing rates because it’s already having a huge impact. But that’s my $.02.

Of course, I’m always here to answer your mortgage and real estate questions. Reach out if you would like more information or personalized recommendations for buying a home in the current market.