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THE REVERSE HOUSING CRASH:
The fact is: 92% of homes with a mortgage have a rate below 6%, and 62% have a rate below 4% – so, instead of selling and being forced to take out a mortgage at a significantly higher amount, seller’s are choosing to stay put and, as a result, fewer homes are sold.
As proof of this, a separate study found that just over 27% of homeowners who are considering listing their home in the next year would feel more urgency to sell if rates dropped to 5% or below – and, 49% would be likely to list if rates were to drop to 4%.
This is why home prices, nationally, have only barely fallen, despite mortgage rates having dramatically increased. As far as what housing analysts believe:
The manager of the S&P Case Shiller Index said that we could see a “5% decline peak to trough…with 2% still to recover, which – is not too bad.”
Goldman Sachs also seconds this, with an expectation of seeing a 2.2% decline in 2023, and they don’t expect this to get any better until interest rates begin to fall.
Or, we also have the mortgage giant, Fannie Mae: Last week, they revised their forecast which projects “that national home price will decrease by 1.2% in 2023, followed by an additional 2.2% decline in 2024.”
In fact, Zillow has taken note of this recent surge and THEY have a slightly different opinion to Fannie Mae: they think that 2023 is going to end the year with prices 5% HIGHER than where it began and this is revised from their initial 3.9% prediction in the beginning of the year. This is because “pending home sales are down 15%, which means buyers are snapping up inventory faster than it’s being listed.”
Economists are now saying there’s 5 main reasons why prices won’t fall:
Number One: Inventory Is Low.
Like I mentioned earlier, sellers who have a low interest rate are “locked in” unless they absolutely have to sell.
Second: Builders can’t build fast enough
Today, it’s said that regulatory approvals, supply chain constraints, and higher costs make it difficult for developers to catch up.
Third: BankRate says that Demographic Trends are creating new buyers.
For example, Millennials represent 43% of the housing market. They’re prioritizing affordability, a slightly larger home, do-it-yourself renovations, and a location that allows for all of this to be had for a much lower price.
Fourth: Banks are issuing fewer loans.
The thinking here is that, IF banks were to start loosening in the future…even more buyers would flood the market, causing home values to surge even further.
And Fifth: Foreclosures Are Rare.
The fact is, banks generally ONLY foreclosure on a property where the buyer owes MORE than what the home is worth and, today that’s not really happening.
Check out the pinned comment for more information and all sources!
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