Home News The home price correction intensifies—what to expect from the U.S. housing market in 2023

The home price correction intensifies—what to expect from the U.S. housing market in 2023

by admin
0 comment

Of course, that’s what we see now. Despite favorable demographics and tight inventory levels, affordability was under pressure —Soaring mortgage rates Combined with bubbled house prices, it’s starting to push house prices down.In fact, this week, U.S. house prices are Case-Shiller US National Home Price Index decreased month-on-month for the first time since 2012.

Across the country, the US housing market has raised mortgage rates to 3%. pandemic housing boom— Heading towards equilibrium in the face of 6% mortgage rates. But we are still in the early stages.When Home price adjustments in progress Not on all markets yet: between May and August San Jose home prices fell 10.6% while Orlando home prices rose 2%.

to better understand where US housing downturn Heads next — and if a house price correction hits more markets soon —luck I reached out to Zonda chief economist Ari Wolfe.When she’s not traveling across the country to talk to home builders, she advise the White House on housing issues.

is less than luckQ&A with Ali Wolf.

luck: When data comes in It’s clear that house prices are falling in many markets across the countryPretty sharp in places. Do you think home price declines will continue into 2023?

Wolf: We haven’t seen home prices fall nationally, but there are some markets where home prices have started to fall and we expect to see that in more cities across the country in the coming months. A correction in house prices is expected in 2023 as long as interest rates continue to rise and consumer demand remains weak.

What kind of markets are the most vulnerable?

The most affected markets are: 1) Markets such as Boise, Las Vegas, and Denver where home prices have skyrocketed due to hybrid work. 2) Markets such as Nashville and parts of Florida that lack a local job base to support rising house prices (in other words, markets where house prices and incomes are out of order). 3) Markets like Phoenix and Austin where housing inventory is growing rapidly.

why Markets like Austin, Boise, and Phoenix are changing rapidly?

Markets such as Austin, Boise and Phoenix experienced the fastest and most rapid housing booms in the country. Record-low mortgage rates, combined with lifestyle changes brought about by the pandemic, such as more people working from home and relocating, have increased dramatically beyond the supply and demand for housing.

People moving from places like California and Washington can get home equity from sales in higher cost markets and use those funds to buy new homes in these relatively affordable markets. Destination buyers have found these markets to be very affordable compared to where they were relocating from, to the detriment of local buyers.

There was a belief that the imbalance between supply and demand was so severe in these markets that the markets would never overheat. Buyers were desperate to secure their homes and were willing to pay almost any price to secure them. Investors and flippers thought these markets were ripe. This mindset has contributed to the massive rise in housing prices.

But as interest rates rose in early 2022, reality began to set in. Home price gains slowed, and he didn’t sell above list price within a day of all his listed homes coming online. Just as some of the new homes under construction began to come online, demand for homes slowed and existing home inventories plummeted as sellers tried to gauge what they believed was at the top of the market. increased to

how do you expect Mortgage rates near 7% impact housing market? we Already adjusted for 5% mortgage rateShould I expect things to heat up with interest rates of 6.5%-7%?

Affordability of a home depends on many factors, but two key inputs are home prices and mortgage rates. We have lived through a unique period in American history when rising home prices were offset by record low interest rates. Inexpensive financing helped keep monthly mortgage payments down.

But interest rates have risen dramatically since the beginning of the year, putting a strain on housing affordability. As interest rates rose from 3% to 4% and millions of Americans continued to lose their homeownership for every 100 basis points of increase, buyers were already starting to drive prices out of the market.

If mortgage rates continue to rise for an extended period of time, we expect housing demand to remain soft, new home construction to be limited, and home prices to need to be revised downwards nationwide.

Want to stay up to date on housing fixes? Follow @NewsLambert on Twitter..

You may also like