Review of all things Real Estate
Last updated 2/9/2023 at 11:35am
Below is a good article which seems to bode well for the real estate market in the near future, perhaps even spring of 2023. After interest rates peaked in October 2022 above 7%, the market slowed to a crawl. The numbers of transactions fell noticeably, which coupled with seasonably slow periods over the holidays, caused near panic in the minds of buyers and sellers alike. Inflation was at a 40-year high which further undermined consumer confidence.
The good news is that inflation has slowed perceptibly and mortgage interest rates have fallen over a point (currently around 6.2% for conventional loans and in the mid 5% for government backed loans like VA, FHA and USDA). I previously reported industry experts forecasted that “maybe” by the end of 2023, interest rates “might” touch the 5% range but given the note of optimism below it feels like it might happen sooner.
The observations made by real estate professionals at our weekly marketing meeting, included local area real estate professionals reporting there is increased activity both on the buyer and seller side. The takeaway: if you have been considering a change of real estate, the time to complete the preparations to come onto the market may be approaching. Available inventory is very low, and buyers are showing up and making offers encouraged by the decreasing mortgage interest rates and softer prices. Read on to see what industry leaders have to say.
US home prices slip for fifth month as market bottom comes into view
The Case-Schiller index posted a 7.7% annual gain in home prices – down from a 9.2% gain in October – while the FHFA index showed a 0.1% decline in prices between October and November
Home prices in the United States continued their gradual decline in November 2022 as elevated mortgage interest rates kept demand tamped down.
The CoreLogic-Case Schiller index and the Federal Housing Finance Authority house price index both posted slight price declines in November, according to new data released Tuesday, Jan. 31.
The Case-Schiller index posted a 7.7% annual gain in home prices – down from a 9.2% gain in October and a 0.6% monthly decrease, while the FHFA index showed a 0.1% annual decline in prices between October and November, and an 8.2% annual increase between November 2021 and November 2022, down from a 9.8% increase posted the previous month.
The Case-Schiller index has now declined for five consecutive months.
The data from late 2022 represents a period in which American home buyers reacted to increases in mortgage rates – which rose above 7% in October – and generally pulled back from the market ahead of the holidays.
“Today’s S&P CoreLogic Case-Shiller Index showcases the slowdown in housing transactions toward the tail end of 2022, as homebuyers worn tired by the relentless surge in mortgage rates took a bigger step back from the market,” Realtor.com Senior Economist George Ratiu said in a statement. “Sales of existing homes in November declined, leaving more sellers to ponder their pricing strategies, especially as the start of the holiday season redirected people’s focus away from real estate.”
The rise of remote work combined with generationally low interest rates fed a housing boom in 2020, 2021 and the first half 0f 2022 that screeched to a halt as the federal reserve began increasing interest rates in mid-2022 to tamp down on inflation.
The rise in rates and slowdown of buyer activity has stoked fears of a housing recession, but some experts have predicted that the housing market already bottomed out in 2022 and is setting a course for normalization.
“Despite the slowdown in price appreciation, talk about a major market correction is just hyperbole,” Bright MLS chief economist Dr. Lisa Sturtevant said in a statement.
“In fact, we may have already seen the bottom of the housing market,” Sturtevant added. “Mortgage rates fell throughout January, prompting more buyers to view properties and make offers. Inflation has begun to ease, boosting consumer confidence. Many agents and brokers are expecting a robust spring housing market, and the overall mood in the market feels much more optimistic than even a month ago.