Home prices are often too high to appeal to buyers facing soaring prices mortgage interest rate. However, sellers are reluctant to lower their asking prices.Sales are plummeting — some people just walk away from trading.
Important reasons: Those who expected a major housing crash may not expect it to happen so soon.home seller No need to sell immediately. Especially since most people have low-interest mortgages that they can’t currently afford (a.k.a. “golden handcuffs.”)
- The housing market isn’t a “liquidation market” like the stock market, where you put something up for sale and take whatever price you get, said Steven Abrahams, head of investment at Amherst Pierpont Securities.
- According to Redfin chief economist Darryl Fairweather, people looking to sell their homes in 2022 rushed to sell earlier this year when there were clear signs of rising mortgage rates. , is responsible for the current deaths.”
- There are 14% fewer new listings on the market now compared to this time last year, according to Redfin data. measure of — teeth 13% reduction.
- Yet prices are still rising… manyHome prices rose 45% from December 2019 to June 2022, said housing giant Robert Shiller. New York Times, Much of that rise was fueled by pandemic-era FOMO and social turmoil. (read it.)
The lively question is what will happen to these big gains. Abrahams believes that home prices will be basically flat for the next few years. This is very different from the last major housing collapse triggered by the financial crisis.
- Back then, homeowners weren’t tied to low interest rates. In fact, many of them could not afford to maintain their homes. They took out variable rate mortgages with little down payment to push up their monthly payments.
- “Prices have fallen, but will we see housing prices fall like we saw from 2006 to 2011? I don’t think so,” said Abrahams.
Yes, but: Not all markets are flat. Some of the pandemic boomtowns, such as the Sunbelt and Boise, Idaho, have already seen prices fall.
- Experts say this won’t be a soft landing for the industry. Homebuilders and anyone in the mortgage business are feeling the pain.
To the point: Jonathan Miller, chief executive of Miller Samuel & Co., a New York appraisal firm, said home prices were “downward and tenacious.”
- “That is, when the market goes down, sellers are more reluctant to cut prices because they stick to what they think is worth it.”
What to see: job market. Unemployment can unlock a lot for reluctant home sellers.