After hearing three stories about home sales that exploded within days of closing, I figured it was time to investigate what was happening in residential real estate this summer.
Things have changed within a few months since I wrote about the Housing Affordability Crisis, leading to the transition to the market.
Here’s what we do know: Rising mortgage rates (30-year rates are at 5.5% as of this writing, up from just 3% at the start of the year), combined with still-high prices, mean there’s activity. significantly slower.
Google searches for “homes for sale” are down 23% from a year ago, which contributed to a seasonally adjusted annual rate decline of 5.12 million in June in current home sales recorded in 2019 and below less than the number of sales made. 14.2% from a year ago.
Even though there are more homes on the market, inventory remains historically low. As a result, the average current home selling price climbed 13.4% from a year earlier to $416,000, a new record high since records began in 1999. Prices rose across all regions and June marked 124 consecutive months of year-over-year increase, the longest streak on record.
According to Bill McBride of Calculated Risk, the rate of price growth is expected to slow through the end of the year. He outlined three scenarios for the housing market in the second half of the year: slow, stall or bust.
A slower pace would mean that “home price growth will increase annually in the mid-single digits. For a ‘stall’ scenario, it will be closer to no change in home prices (seasonally adjusted, yearly). And a “bust” scenario For, it will be a fall in house prices over the next few years.”
McBride believes the probability of a stall is 50/50 with a slow rise as the “next most likely scenario”. For those fearing the bust of the mid-2000s, where prices have fallen by a quarter nationally, McBride thinks this cycle’s version of the bust is likely equivalent to a 5-10% drop nationally. Will be
Meanwhile, the real estate story is characterized by transition and reassessment in the summer of 2022. Some buyers are holding back from potential purchases because their mortgage commitments have run out. Others are noticing that deals on their current homes are falling apart, which means moving or the purchase of the next home must be delayed.
(Note: If you are a buyer and want to renegotiate a signed deal, discuss the details of your contract with an attorney. You need to understand that you need to walk away from your agreement without losing your deposit. What is allowed, which can be as high as 10% of the purchase price on the house.)
According to Redfin’s analysis of MLS data, “Across the country, nearly 60,000 home-purchase agreements fell in June, the equivalent of 14.9% of homes under contract that month … this record with the exception of March and April 2020. But some of those deals will be revalued, others won’t survive, and go back home on the market.
When would-be sellers resume this process, they will find that with more competition for qualified homebuyers, things have changed.
Redfin notes that as of mid-July, the total number of homes for sale registered its biggest increase since August 2019, and home sales prices continued to decline; The seasonally adjusted Redfin Homebuyer Demand Index, which measures requests for home tours and other home-buying services from Redfin agents, was down 17% from a year ago; And buyers are no longer waiving inspection, appraisal, or mortgage contingencies.
Stay tuned for further updates!
Jill Schlesinger, CFP, is a business analyst for CBS News. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at email@example.com. Check out his website at www.jillonmoney.com.