“We saw [home] Prices have risen very strongly over the last few years. So now it changes. And interest rates are going up,” Powell told reporters in June. “We are fully aware that mortgage rates have gone up significantly, and you are looking at a changing housing market. Will it affect me? I’m not sure.How much will it affect housing prices?I don’t know.”
“If you’re a homebuyer, looking to buy a home, or a young person, you need a little information. resetWe need to get back to where supply and demand are coming together again, inflation is low again and mortgage rates are low again. ”
it’s clear The Fed’s “Housing Reset” Give homebuyers more options (i.e. rising inventory) and more breathing room (i.e. less bidding war). The question mark Powell acknowledged in his June is whether it will drive home prices down. Historically speaking, house prices are sticky until the economy forces a hand on sellers.
To get a better sense of where house prices are headed, luck The company told us their Has been updated August assessment of the country’s largest regional housing market. To determine the likelihood that home prices in your area will decline, core logic Factors such as projected income growth, projected unemployment, consumer confidence, debt-to-income ratio, affordability, mortgage rates and inventory levels were evaluated. CoreLogic then classifies the local housing market into one of five categories, grouping by the likelihood that home prices in that particular market will fall between June 2022 and June 2023. has become Here are the groups the real estate research firm used for his August analysis:
- very high: Over 70% chance of price drop
- high: 50%-70% chance
- Moderate: 40%-50% chance
- low: 20%–40% chance
- very low: 0% to 20% chance
Between June 2022 and June 2023, CoreLogic predicts US home prices will rise another 4.3%.But it’s nationwide. Geographically, some markets are at higher risk of price declines.
Among the 392 rural housing markets surveyed, core logic We found that 125 markets have a 50% or greater chance of falling local home prices over the next 12 months. in JulyCoreLogic found that 98 markets have a greater than 50% chance of falling home prices over the next 12 months. in june45 markets were at risk. Maythere were only 26 markets that fell into that camp.
Why does CoreLogic keep reducing risk ratings? U.S. Housing Market Data Deteriorating. year-on-year Sale of existing homes When new home sale They decreased by 20.2% and 29.6% respectively.that is sharpest decline in housing activity since 2006.
“With mortgage rates hitting new all-time highs in June and housing demand plummeting, the downside potential for home prices continues to intensify,” said Selma Hepp, deputy chief economist at CoreLogic. . Fortunee.
“Risk of price declines is concentrated in areas where home price growth has been very strong over the past two years, but population and income growth have not been at the same level, with historically rising mortgage rates and signs of a recession. This is an area sensitive to
Of the 392 local housing markets CoreLogic measured, 67 had a “very low” chance of a home price decline over the next 12 months as of August. Another 133 housing markets belong to the ‘low’ group and 67 markets belong to the ‘medium’ group. CoreLogic put 85 markets in the “high” camp. CoreLogic classified 40 markets as having a “very high” chance of a home price decline over the next year. This includes major markets such as Boise, San Francisco and Lake Havasu City.
The real estate industry should always be vigilant When the Federal Reserve Goes into Anti-Inflation ModeThe sector is, after all, the most interest rate sensitive sector in the economy. That said, some regional markets require more vigilance than others. Historically speaking, When the housing cycle “rolls over”, It is usually the significantly ‘overvalued’ housing market that is most at risk of a house price correction.
According to CoreLogic, 75% of the country’s rural housing market is “overvalued” compared to underlying economic fundamentals.many these bubbled markets, like Boise, are most at risk of price corrections. But he has one big exception. San Francisco. CoreLogic says the Bay Area is at “very high risk” of falling home prices, but says the market isn’t overvalued. what happened? High-cost tech hubs like San Francisco and Seattle have been hit hard by the technology slowdown. As well as the high-end real estate market, the technology sector is also sensitive to interest rates.
Many research firms agree with CoreLogic that markets such as Boise and San Francisco are at risk of falling home prices. However, it would be eyebrow-raising for CoreLogic to consider Phoenix, a market whose inventories have returned to his 2019 levels, as “low risk” of price declines.research groups like Moody’s Analytics When John Burns Real Estate Consulting Phoenix home prices are expected to decline over the next year.
“People don’t expect the price [in Phoenix] Increase rapidly or not at all. Median home prices in Metro Phoenix have fallen over the past two months. If prices continue to fall long enough, eventually people will expect prices to continue to fall in the future, and we will be able to see the flip side of the housing market in 2021.” said independent real estate analyst John Wake. luck.
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