Federal Reserve Chairman Jerome Powell told reporters last month that the US housing market “Difficult to fix”
This housing modification—started a few months ago— has only gained momentum in the weeks since Powell made his statement. Mortgage purchase applications down 38.4% year-on-year.
Historically speaking, these so-called housing adjustments typically see housing activities such as: house sales, plummeting long before house prices begin to correct. This historical fact explains why so many industry insiders are perplexed today. Many markets are already seeing sharp declines in home prices.
on thursday luck We’ve learned that the home price adjustment is spreading to more markets.according to it Jiro The Home Value Index (ZHVI) tracks housing market data for 896 regions in the United States.
Let’s look at the data.
Of the country’s largest 896 housing markets, 121 saw home prices fall between May and September.that’s all 117 markets where home prices fell from May to August.
The markets most shaken by house price corrections fall into one of two groups.
In the first group are bubbling market These include Austin (down 8.23%), Boise (down 6.35%), Colorado Springs (down 4.13%) and Phoenix (down 6.6%). those markets, According to Moody’s Analytics, all “greatly overrated” during the pandemic housing boom. That is starting to change.soon Soaring mortgage rates After pouring cold water on these markets, prices began to fall.
The second group consists of high-cost tech hubs such as San Francisco (down 7.88%), San Jose (down 10.59%) and Seattle (down 3.93%). These markets have been hit with a double whammy. Not only has the high-end real estate market become more rate sensitive, so has the technology sector.
when luck We coined the term pandemic housing boom, but knew that if the boom ended in a recession, we would have to relabel it. pandemic housing bubble Or pandemic housing bust.we too set standards for that: Markets that drop more than 10% from peak to trough are labeled as pandemic housing bubbles.
So far, only San Jose (down 10.59%) has earned the Pandemic Housing Bubble label. However, other markets are close. In total, home prices fell by more than 5% between May and September in 19 local housing markets. This includes western markets such as Santa Cruz, California (down 7.51%) and Boulder (down 7.46%).
Companies like Where is the ongoing house price correction headed next? Goldman Sachs and Moody’s Analytics predict that domestic housing prices will fall about 10% over the next few years.As an overview, from peak to trough, US house prices fell 27% between 2006 and 2012.
Of course, if domestic house prices actually fall by 10% over the next few years, 20%, 25% and even 30% likely to fall in some marketsThe most suspect is likely where house prices are already falling most rapidly.
On the one hand, some of these house price corrections are quite large numerically. Meanwhile, even markets that seem bankrupt are still up significantly since the outbreak of the pandemic.
Look no further than Austin. Over the past four months, Austin home prices have fallen 8.23%. However, market house prices remain up 60.93% since the outbreak of the pandemic.
Simply put, the collapse of pandemic housing goes a long way to putting a dent in it. pandemic housing boom increase.
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