Pressurization. Perhaps the best word to describe the current US housing market. record housing price increases —43% increase during pandemic– coupled with 6% mortgage rate We have millions of potential homebuyers on the sidelines.This combination improves the debt-to-income ratio for new buyers A level similar to the height of the housing bubble.
or affordable crunch already pushed the U.S. housing market into a housing slump. Strong home salesHome builders are canceling projects.When Real estate companies are laying off.
While this ongoing housing recession is clear,The Federal Reserve’s Inflation Warfare Has Spurred— Housing activity will drop sharply, but it’s not clear how that will affect house prices.
To better understand the movement of home prices, luck We looked at monthly house prices as measured by Jiro Home Value Index (ZHVI). In total, we examined housing market data for 896 regions in the United States.
Let’s take a look at Zillow’s data.
Back in May, Moody’s Analytics Chief Economist Mark Zandy makes a bold declaration: The housing market will soon enter a house price correction. So far he looks right. Of the 896 major regional housing markets tracked by Zillow, 117 saw home prices decline between May 2022 and August 2022.
The housing markets hit hardest by house price corrections fall into one of two groups.
In the first group are merry market These include Austin (down 7.4%), Boise (down 5.3%), Denver (down 4.3%), Las Vegas (down 2.3%) and Phoenix (down 4.4%). In these markets, wealthy buyers from cities such as San Jose and Seattle have pushed prices far beyond. What local income has historically supportedThese booms faded away when soaring mortgage rates pushed even wealthy suburban buyers to the sidelines. So markets like Boise and Austin are currently plagued by full-blown housing bankruptcies.
But the biggest price drops aren’t in booming markets. In fact, home prices fell the most in high-cost tech hubs such as San Francisco (down 7.8%) and San Jose (down 10.6%). These markets have taken a double hit. As well as the high-end real estate market, the technology sector is also sensitive to interest rates.
In fact, Boise and Fairbanks were the only two cities where house prices declined year-over-year between August 2021 and August 2022.
Zooming out even further, 2022 price declines in markets such as Boise appear even smaller, at least compared to the gains seen during the pandemic housing boom. Even taking into account his 5.3% price drop in Boise this summer, market home prices are still up 48.6% since March 2020.
But we could still see more pandemic housing boom Gain is cleared.
research firms like Moody’s Analytics, Zonda, John Burns Real Estate Consulting, TD BankWhen Zelman & Associates Expect house price adjustments to continue to spread across the country. In particular, active markets across the Sunbelt remain the most exposed.
“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,” said Rick Palacios Jr., director of research at John Burns Real Estate Consulting. luck.
This story was originally Fortune.com