“Home price growth continued to gain speed in early spring as eager buyers tried to get in front of the mortgage rate surge,” Selma Hepp, deputy chief economist at CoreLogic, said in a statement. “Concern about rates contributed to much of the spring home buying demand, which was not, however, met with a comparable increase in new home inventory.”
Lol. I have no idea how Moodys survived the MBS debacle or why anyone would pay attention to anything they say.
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Those folk and Deutsche Bank are still taken seriously. Why, I have no idea.
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That headline is BEYOND misleading. Their first bullet point is also idiotic considering yr/yr inventory is down. Inventory is still 67% below pre-pandemic levels.
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It’s a totally flawed analysis. Housing is local. Prices are mostly booming in cities with booming job markets and geographic restrictions on building. He should be looking at specific MSAs and the population and household formation vs. housing built. Even with that, the author admits there’s a large shortage. RE is probably the safest place with inflation this high.
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As far as I am concerned, so long cost of labor and materials are spiraling upwards, house prices would rise regardless of mortgage rates.
This is all we need to know and is what everybody said. I gave up reading after awhile, sound like an academic paper.
Are prices declining? Redfin and Zillow estimates of my properties are stilling going up.
So, I mean if markets stay this low for a while, that has to cool off real estate market, right?
I think it has to cool off given RE is up 20% vs. last year. Expecting 20% again is crazy. Articles are written that a slowdown to 5% growth is doom and gloom.
Mortgage applications for purchases increased for the second week in a row, according to Mortgage Bankers Association’s survey for the week ending May 6, rising 5% from one week earlier.
5% is nothing burger. I recalled it was much higher when I first bought a house.
“The challenges continue to mount for prospective homebuyers. Listing prices are at record highs and homes for sales are at historic lows,” said Realtor.com Senior Economic Analyst Joel Berner. “The rising costs of living and falling value of investments make saving for a down payment more difficult, and higher mortgage rates make borrowing for a home more expensive.”
Plenty of experienced RE investors with large swaths of cash. Your sincerely has enough cash to buy two Austin SFHs in cash. First time buyers are most sensitive to mortgage rates, has always been the case.
Yes, RBA prices will fall 20%, and greater Bay Area will fall 20-40%, by this time next year
Even if it does …it will recover
In Bay Area it’s either world war ( crazy competition for houses among people )
Or Cold War ( preparation for next world war )
Lol, yes there’s a deep history of home prices falling when there’s high inflation.
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“We know the system is logjammed, but we don’t know how far back the logjam goes…In my opinion, it will take a couple months for all this to shake out,” Devyn Bachman, vice president of research at John Burns Real Estate Consulting, tells Fortune.
As the housing market works through that logjam, home prices in the short term might continue pushing upward. According to Redfin’s Fairweather, that’s exactly what we’re still seeing. “Even though price drops are becoming more common, most homes are still selling above asking price and in record time,” she writes.
TL;DR version. Inventory is a lot lower than the 6 month balance market. Even if there is a price consolidation, it would be fleeting. Too many RE investors have prepared themselves for a correction.
Price drops aren’t a great metric. It’s mostly a measure of realtor incompetence. Watching yr/yr price changes matters more. Is anyone going to panic if it slows down from 20% to 5%?
Housing isn’t going to drop when inventory is this low. There’d need to be an event to create inventory. That’s unlikely with unemployment below 4% and a record number of people quitting for better jobs.
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In the longer time frame, high inflation does imply that housing prices will go up.
But in the short term (1-2 years), housing prices will go down for the following reasons:
- Stocks are in a bear market, esp. NASDAQ. They are the source of down payment - suddenly people’s down payment is cut by 30% or more.
- Interest rates almost doubled overnight - last year, I refinanced my jumbo loan into 2.62% 30 year fixed. Same loan product from same lender now costs 4.75-5%. So, people’s monthly mortgage payment is up sharply.
Taken together, this almost guarantees that home prices will come down. A small house few doors away on my street just closed escrow at little over $3M - 800k over asking. Last year (2021) the exact same floor plan (this is the builder’s original plan from 1960) in the same neighborhood sold for $2.5M. In 1 year, property price popped up by 500-600k.
I would not be surprised if in 2023 - one year from now - the same floor plan again sells for $2.5M. A fall of 20% or 500-600k from today’s prices is a reasonable thing to expect