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Real estate: A looming end to the long boom

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“The booming housing market is stalling,” said David Harrison and Nicole Friedman. wall street journal. Buyers trapped between near-record prices and skyrocketing mortgage rates are pulling back. July figures released last week showed existing home sales fell 5.9%, marking the sixth straight month of decline. Sales of new homes fell further, down 12.6% for the month, down nearly 30% year-on-year. “Housing construction has also dried up and mortgage applications are declining.” Home prices are on the rise, rising 46% nationally in the past three years. Home prices are now at their lowest since 1989, and the market is changing rapidly. One reason prices remain high is that “years of slow new home construction following the 2007-2009 recession have left the housing market in short supply.”

Ask Jonathan Levin in Will Home Prices Just ‘Flat’ or ‘Crash’? bloombergBoth the industry and economic policymakers believe the former is likely. The Federal Reserve wants to make housing more affordable and slow home price growth to 5% a year. But this is “dangerous territory” and when prices start to fall, it’s hard to predict where they’ll end up.In less than six months, California home prices have skyrocketed. . San Francisco and San Jose then saw sharp declines. Several other markets followed, including Austin and Seattle. Prices are currently falling in 22 of the 100 largest US markets. Americans are now in less debt than they were during the housing crisis of the mid-2000s. This “means there probably won’t be a round of forced sales.” Homeowners and brokers are overly optimistic, said Jonathan Ponciano. forbesThe home builders who have the best grasp of demand and costs aren’t so confident. Of those, he said nearly one in five “reduced prices to bolster sales or limit cancellations.” This is starting to look more and more like a “housing market recession”.

“Americans who survived the 2008 crisis may be seeing flashbacks as the red-hot markets begin to cool,” said Sigrid Forberg. Yahoo FinanceBut today things are very different. Lenders are much looser, so fewer homeowners are unable to make payments. Overbuilding in the 2000s meant an oversupply of housing. In contrast, today there is “great demand and short supply.” Remember, a 2008-style collapse isn’t the only danger to the housing market. bloombergEven without a sharp decline, there will be a serious “reverberation from very low interest rates in 2020 and 2021.” The Federal Reserve (Fed) has lowered interest rates to an unnaturally low level (just 2.65%) in an economic stimulus package. Buyers who bought in 2020 and 2021 were very reluctant to sell or trade up, saying “the housing market could be slower and less liquid over time”. is one of I got my home in 2021 for him. Now, “I don’t know if I can afford to move.”

This article first appeared in the latest issue. 1 week magazine. If you want to read more, you can try her 6 issues from Risk-Free magazine. here.

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