Is the Housing Market Actually “Healthy”? Here’s My Scorecard to Find Out

In this article

With all the headlines, noise and confusion surrounding today’s housing market, it’s easy to assume things It’s still broken. But that’s true Really case? Can we do it actually It’s in health Housing market in 2025?

That’s a question I’ve been asking myself recently. And it began after reading Logan Mohtashami’s new work. This is an analyst I have followed and admired for years. Logan is not hype or clickbait. He is a data man with a strong predictive track record. So when he published a headline claiming it “The housing market is actually Much healthier in 2025.” It paused me.

Is that true?

We all feel nothing but normal in the aftermath of our housing cycle. Still, I decided to dig into the data, think through it, and figure out where we are Really Stand today. This is what I found.

Definition of a “healthy” housing market

in front We’ll decide If we are in a healthy market, we You need to Defines what that means. We have compiled a scorecard for five key indicators that appear to define a healthy housing market.

1. A solid balance between supply and demand
2. Generally home prices Maintain Pace with inflation
3. Healthy transaction volume (home) actually sale)
4. Reasonable affordable prices for buyers
5. Low Levels of Pain – Foreclosure and Delinquency

This scorecard has left the market not looking healthy for a while.

Let’s consider where we went:

• Supply and demand? It’s not even nearby. We have been in a tough seller market since 2018.
• Transaction volume? It’s down 50% from the 2022 level, with a 30% off normal baseline.
• Affordable prices? The worst case scenario is over 40 years.
• Is it painful level? Surprisingly low – it was one bright spot.

So it’s not surprising lots of People find it quite difficult to believe in the idea of ​​a “healthy” housing market.

But there are signs of life

Logan’s argument makes sense. Some important The data point is moving in the right direction:

• Despite the high mortgage rate, home sales are up year-on-year.
• Demand is stable actually It increases.
• Inventory is increasing. It’s 32% higher than last year, but is still below the level in 2019.

These are good signs, and They are Match the things you’ve tracked in your monthly market updates. However, positive movements are not necessarily comparable to healthy markets. So let’s do it I’ll go back Scorecard and Please take a fresh look.

Housing Market Health Scorecard – 2025

1. Balance between supply and demand

Inventory is increasing. Market days (DOM) has returned to about 53, a shy average of 60 before the pandemic. It’s approaching a balanced market. If 2019 was the baseline for a “normal” year, we’re approaching it again.

Score: Health

2. Prices to catch up with inflation

So far, home prices have paced inflation. That’s what we want. do not have boom. do not have Collapse. It’s just stable.

Score: Health

3. Transaction volume

This is still rough. We hover around 4 million home sales per year. It’s quite below where we should be for a healthy market.

Score: Not healthy

4. Affordable prices

still One of the weakest points. Home prices are getting higher. The price is high. Wages have not kept up. One of them moves and even buyers It’s narrowed down.

Score: Not healthy

5. Pain and delinquency

this It is currently the strongest signal for health. Foreclosures are still below 2019 levels. Some Although early signs of stress for FHA and VA loans, overall the delinquency rate remains low.

Score: Health

Final score: 3 out of 5

That’s progress. Better than where we were. A year ago We were probably one or two out of five. That’s right – by numbers – we are more health We’ve been around for years and yet it’s not where we want to be.

Where does things go from here?

The two metrics that still drag us (affordable possibilities and transactional volumes) are closely connected. If the affordability improves, transaction volumes should continue. But how does that happen?

There are only a few options.

• Lower mortgage rates
• Higher wages
• Price adjustment (but could put the price/inflation balance at risk)

Now, I don’t expect prices to fall dramatically in the coming months. Prices may stagnate a bit, but I’m not expecting Selection subject Decreased. So I think we’ll be a little longer in this “intermediate” phase. It’s closer to stability than chaos, but still Completely health.

Simple words about investment

Just because the market is not “healthy” doesn’t mean it’s a bad time to invest.

in fact, Some of the best opportunities happen when things are imbalance. I bought my first property in 2010. This is absolutely a textbook health market. The same applies to many investors from 2020 to 2021. These markets were confusing, but with the right strategy it was extremely profitable.

The best deals often come at times of uncertainty, and that’s what we see now. More inventory, less competition, longer decision window. That’s good news for prepared investors.

Of course, I would like to hear what you think. Do you think the market is healthier than it was a year ago?