The housing market, at last, appears to be cooling off

[Celerity]

Many sellers are reluctant to lower prices, but houses are sitting on the market longer and buyers have more options

https://www.washingtonpost.com/business/2022/07/09/housing-market-slowdown-mortgage-rates/

https://archive.ph/2D7yd



After a stunning rise in home prices enriched sellers and keyed up buyers into frantic bidding wars, there are signs that the U.S. housing market is starting to cool amid a surge of new inventory and higher interest rates. “For sale” signs are multiplying in previously red-hot markets like San Jose, Chicago and Phoenix. The volume of U.S. monthly home sales have registered double-digit declines in the past year, according to estimates from Zillow and the National Association of Realtors.

In May alone, the number of houses sold is down 19 percent from the year-ago period, according to Zillow, and preliminary data suggests the falloff was more pronounced in June. “This year’s buyers are just much more savvy, and they deserve to be because they’re going to be paying more to purchase the home,” said Daniel Valdez, an agent with eXp Realty in Sacramento. The slowdown has, so far, provided little relief to buyers. Instead, analysts say, a growing affordability crisis ― driven by the collision of inflation and rising interest rates ― is forcing many would-be buyers to walk away.

That’s because some sellers, mindful of the stratospheric gains of 2020 and 2021, which brought the average home price up more than 40 percent, are reluctant to lower their expectations. And home values are still gaining, up 19 percent on average in the year ending in June, according to the data firm Black Knight. “The market’s cooling off, but that cooling has happened on the backs of buyers getting discouraged, on buyers being forced out of the market,” said Jeff Tucker, a senior economist at Zillow. “People who thought they would join the party are being greeted by absolute carnage as far as affordability right now.”



The cooling housing market reflects broader changes in the economy as policymakers work to get decades-high inflation under control. Rock-bottom interest rates in 2020 and 2021 helped fuel the surge in housing prices since the start of the coronavirus pandemic in 2020. But the Federal Reserve reversed course this year after inflation spiked, making the price of food, fuel, housing and other essentials a dominant economic concern. The central bank has bumped up its benchmark interest rate three times in 2022 and signaled that four more increases are pending. The most recent hike in June was three-quarters of a percentage point, the Fed’s largest since 1994.

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[Wingus Dingus]

1. Great. Have to sell my house next year. I have the best timing.

[XanaDUer2]

2. Maybe we can stop renting and get an affordable place

Maybe

[WarGamer]

3. This is just the start...

The next step is people walking away from their million dollar mortgages and dropping the house key in the mortgage co/banks mailbox.

It happened in the 90's and the 00's and will happen next year.

People look at their 1,000,000 mortgage balance on their home that now appraises for $800k... so they buy another house while their credit is still good and then walk away from the underwater house.

It's instant equity.

22 is just the start, 23 is going to be ugly.