Home News ‘Some Relief’ Possible For Home Buyers As Housing Market Poised For ‘Most Significant Contraction’ Since 2006

‘Some Relief’ Possible For Home Buyers As Housing Market Poised For ‘Most Significant Contraction’ Since 2006

by admin
0 comment

The Housing market Decrease in purchasing activity price Possible, according to the top economist From the government-sponsored mortgage company Freddie Mac.

share data From a weekly mortgage application survey by the Mortgage Banking Association, Freddie Mac’s Deputy Chief Economist, Renkefer, observed that mortgage applications fell by 40% from their seasonally adjusted peak. “The US housing market is in the early stages of the most significant contraction of activity since 2006,” he claimed. “Mortgage applications show a significant decline over the summer.”

Similarly, sales of luxury homes, the top 5% of the market, fell 18% between February and April 2022 compared to the same period last year. The Wall Street Journal.. A Stock market plunging You may hesitate among high-end buyers.

Persistent economic predicament — Supply chain bottleneck When Labor market shortage It’s getting worse Overall inflation rate — It also puts a pause on consumers and has a direct impact on the housing market.

Keefer too I got it “The time when interest rates rise sharply is usually associated with a reduction in home sales,” he said. This is due to the rising cost of borrowed funds caused by high interest rates. In fact, 30-year fixed-rate mortgages surged from about 3% at the beginning of the year to 5.2% as of June 9. data From Freddie Mac.

“After little activity in the past few weeks, mortgage rates have risen again on the back of rising economic activity and the influx of inflation data,” said Sam Carter, chief economist at Freddie Mac. press release.. “The housing market is so sensitive to interest rates that demand is declining again as mortgage rates soar. A significant decline in buying activity, coupled with an increase in the supply of homes for sale, has led to higher prices. To a more normal level and provide some peace of mind to buyers who are still interested in buying a home. “

From the second quarter of 2020 to the first quarter of 2022, the median home sales price rose from $ 322,600 to $ 428,700, according to the US Census Bureau. This is a 33% increase in less than two years. data..

According to recent reports, most economists do not believe the United States is currently experiencing a housing bubble, despite rising prices and reduced buying activity. Investigation From Zillow. Sixty percent of respondents who denied the bubble state pointed out reasons such as inventory shortages, low credit risk, and other factors being separated from speculative behavior.

But earlier this year, an analyst at the Federal Reserve Bank of Dallas predict Housing bubble in “fundamental agnostic” and “market vibrancy” — a warning that hasn’t been issued since the collapse of the housing market in 2008.

“Assets (housing in this case) are at a major stage of expansion of the bubble when price increases are not keeping pace with market fundamentals,” they write. “The rapid rise in real home prices as currently observed does not indicate a bubble in itself … but if it is widely believed that today’s strong rise in prices will continue, real home prices will be. It can deviate from market fundamentals. If many buyers share this belief, purchases resulting from “fear of oversight” can push up prices and raise expectations for a significant rise in home prices. There is sex. “

You may also like