After soaring to new heights during the pandemic, the housing market is finally starting to cool. Data on the speed of home sales over the past decade shows how the market rose in his summer of 2020 and began to contract this spring.
Zillow Senior Economist Jeff Tucker said: “The affordability issue is the main driver of the slowdown in housing.
Buyers are retreating from the market as monthly mortgage payments become unaffordable for many households. rising interest rates When record priceAs a result, there is pressure on sellers to lower prices, accept markdowns, and rent out homes rather than put them up for sale. Both buyers and sellers have expressed uncertainty about where home prices will settle.
a cooling market It doesn’t necessarily mean that house prices will fall. His median per square foot in August is 9% higher than he was a year ago. However, price growth has slowed, with February prices 18% higher than the previous year.
Just as home-hunting interest exploded in certain regions of the country, sparking fierce bidding wars and shocking price increases during the pandemic, many of those same regions are now experiencing declines. Also, cooldowns are not geographically uniform.
“The hottest neighborhoods will see the coldest housing markets,” said Eric Finnigan, director of John Burns Real Estate Consulting.
Zonda chief economist Ari Wolf said the market, which offered an escape and a change of scenery in the early days of the pandemic, has attracted new residents from across the country.City The Southeast, Southwest, Mountain West, and suburban California were considered “winners” of the pandemic because of the massive influx of demand. But as interest rates continued to rise, buyers found themselves being undercut by the market, Wolf said.
The pay-to-income ratio for housing (a measure of personal finance that measures how much a buyer can afford to pay) has reached record levels in many of these markets. And those who have moved have lost the confidence and enthusiasm to move forward with their home purchase.
“The fastest growing markets were also the ones that fell victim to their own success in 2022,” said Wolf. Said.