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THE 2022 HOUSING MARKET:
On the most basic level, we have the numbers that everyone is talking about: Mortgage demand fell to a 22 YEAR LOW as rates have almost doubled from a year ago, mortgage applications are 18% lower than the same week in 2021, and refinances saw an 83% drop year over year.
BUT – the one piece of data that matters the most, is that for the first time since prior to the pandemic, Median prices have started to DECLINE, MONTH OVER MONTH, with prices now $10,000 LOWER THAN THEY WERE, JUST A MONTH AGO.
As the National Association Of Realtor’s explains, the ongoing sales decline reflects the impact of higher mortgage rates, which peaked at 6% in early June, before now declining back to 5%. This increase SEVERELY impacted the number of buyers in the market, with total housing inventory having increased 4.8% from the month prior – meaning, with fewer homes being sold, there’s more AVAILABLE for buyers to chose from.
HOWEVER, even though they ADMIT that “we’re witnessing a housing recession in terms of declining home sales and home building”….nearly 40% of homes are still selling at full list price, and properties were staying on the market for a record low of just 14 days in July.
On top of that…82% of homes sold were on the market for LESS THAN A MONTH…suggesting that, even though prices ARE beginning to fall…they’re not declining as fast as most people would expect.
In terms of falling home prices, The largest drop, so far – was San Jose, which recently fell 4.5% MONTH OVER MONTH, along with Phoenix Arizona, San Fransisco, Austin Texas, Sacramento, and San Diego – while areas like Miami, Richmond, and Memphis, Tennessee actually saw a slightly INCREASE.
On top of that, Zillow REVISED their forecast to show home price growth at just 2.4% throughout the next 12 months – which, WHEN adjusted for inflation – is likely going to mean: REAL PRICES, OVERALL, WILL PROBABLY DECLINE.
Moody’s Analytics ALSO believes that a large portion of the market will see a decline throughout the next year, with the most “At-risk” housing markets being the ones that saw the MOST home appreciation over the last 2 years.
That’s why, the way I see it – unless you live in a highly speculative market – most likely, some softening is healthy, and it might be a good opportunity to negotiate a lower price on a property that’s otherwise perfect. Besides that, though, I wouldn’t worry about a catastrophic real estate collapse, BUT, personally – I would only buy a property that you intend to keep for at least 7-10 years.
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