Home News Home prices are falling in these 98 major housing markets—only 50 markets remain at the peak

Home prices are falling in these 98 major housing markets—only 50 markets remain at the peak

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soon Mortgage rates soar this springthe US housing market fell into what the industry likes housing recessionmeans residential activity level; like home sales, is rapidly contracting. This should come as no surprise. As the Federal Reserve fights inflation, history tells us that a so-called housing recession is on the horizon.

While housing recessions are historically common, house price corrections are much less common. That’s why, like in 2006, the bulls were reluctant to acknowledge the possibility of a fall in house prices. But again, they are wrong.

John Burns Real Estate Consulting provided the data when it was released this summer. luck Shows that there were frothy markets like Boise and Phoenix Already Blowing Home Price TopsNow, the correction in house prices appears to be progressing beyond the overheated Western housing markets.

Of the 148 major regional housing markets tracked by John Burns Real Estate Consulting, 98 have seen home prices fall from their 2022 peak. in 11 markets, Barnes Home Value Index* Already reduced by more than 5%. Simply put: The correction in U.S. house prices is sharper and more widespread than previously thought.

“Our view is that even if supply levels aren’t rising, home prices will fall. Research Director Rick Palacios Jr. said. luck.

When the last housing cycle reversed in 2005, house prices did not fall until inventory levels spiked.Despite falling home prices Inventory levels remain 41.5% below pre-pandemic levels. Is there such a thing? good, Soaring mortgage rates Combined with record home price increases pushed the housing market to bubble levelAnd now buyers are rebounding.

“The longer it is [mortgage] We think housing will continue to feel it and be in this reset mode as interest rates continue to rise.And there’s an affordable reset mechanism on that must happen now [home] price. So there are a lot of markets across the country where he expects home prices to drop by double digits,” Palacios said.

The housing markets hit hardest by the pandemic housing downturn fall into one of two groups.

The first is a high-cost technology hub. In fact, the biggest declines in house prices were in San Francisco (down 8.2% from peak in 2022), San Jose (down 8.2%) and Seattle (down 7.8%). As well as the high-end real estate market, the technology sector is also sensitive to interest rates.

The second group includes: bubbling market Austin (down 3.5%), Boise (down 3.5%), Phoenix (down 5.3%) and Reno (down 5.3%). The pandemic housing boom has pushed home prices in markets like Austin and Phoenix far beyond what local incomes historically supported. According to Moody’s Analytics, Boise alone is “overrated” by 72%. Historically speaking, when the housing cycle “rolls over” it usually hits the significantly “overvalued” housing market the hardest.

98 markets have fallen from their peak, while another 50 have yet to fall from their 2022 peak prices. Most of these markets are located along the East Coast. In some of these markets, such as Newark and Louisville, pandemic housing boomEleven of those markets are in Florida and have been surprisingly resilient this summer.

But just because the market hasn’t seen a drop in house prices doesn’t mean they won’t. In fact, this may still be in the early stages of a home price adjustment. Since May, John Burns Real Estate Consulting has predicted that US house prices will fall in 2023 and 2024.

from peak to valley, Moody’s Analytics expects US house prices to fall by up to 5% this cycle.In a significantly ‘overvalued’ housing market, Moody’s Analytics expects a 5% to 10% decrease. That call doesn’t assume a recession. Moody’s Analytics expects domestic house prices to fall by 5% to 10% if a recession materializes. In a vastly ‘overvalued’ housing marketa recession means that house prices are likely to fall between 15% and 20%.

Several other research firms, such as Zonda and Zelman & Associates, are predicting a fall in U.S. house prices. But no one expected US house prices to fall as much as they did last time. from peak to valley, US home prices fell 27% between 2006 and 2012.

“i know it [double-digit home price declines] Sounds very bad, but the reality is that you have to take a long-term lens on this and have some perspective. Because these markets have seen gains of 30%, 40%, 50% or more in the last year or two. So house price growth was really compressed in 10 or 2 years. So even if the predictions are correct and prices fall by double digits in some of these markets over the next few years, house prices will only reset to what they were in 2020 or early 2021,” Palacios said. says Mr. luck.

If you want to hear the full interview with Rick Palacios Jr. Go here to skip to the 9:00 minute mark. If you want to get the latest information housing correctionfollow @News Lambert upon twitter.

* Due to the ongoing housing adjustment, high-end home sales are declining at a faster rate than other price points. Of course, this skews both the mean and median home sales prices. The Barnes Home Value Index, a proprietary calculation of local home values, helps filter out that noise for both new and existing homes. August 2022 results are provisional.

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