Everyone wants to know what’s gonna happen to the real estate market?

Forbes Advisor did some research and presented their opinions. 

We’ll share some below. 

Will housing prices continue to rise?

 “Inflation, high mortgage rates and record-high home prices are making it harder and harder to afford a home, and that’s not likely to change soon. Economists at Fannie Mae expect prices to be, on average, 16% higher in the coming quarter than they were a year ago.

MBA economists also expect home price gains for the foreseeable future. They forecast a 9.8% yearly increase for prices in 2022 compared to 2021 and a 2.8% gain in 2023.”

Should I buy now or wait?

“Buy based on your budget and needs. If you find a home you love in an area you love and it also fits your budget, then chances are it might be right for you. But if you make too many sacrifices just to get a house, you may end up with buyer’s remorse and an expensive albatross you have to offload.”

Forbes Advisors has some advise for buyers and sellers in this market, click here to read their article in entirety. 

Last week, we provided market statistics related to the local market. 

This week we’ll provide information about the national market. 

Realtor.com released their July Housing Market Report. Here’s what Sabrina Speianu, Economic Data Manager, had to say, 

“Realtor.com®’s July housing data release reveals that the housing market is continuing to move toward more balance. Inventory levels continue to rise, providing more options to homebuyers who are still actively looking for a new home and price reductions are also increasing, as sellers adjust to the new normal. However, housing remains expensive and fast-paced with the median asking price close to June’s all-time high while time on market is still slightly lower than last year and significantly lower than pre-pandemic levels. Although demand has softened greatly compared to last year, housing activity remains robust compared to pre-pandemic levels.”

Top takeaways from the report are:

• Less Frenzy Means More Options for Those Still Looking to Buy a Home
• Time on Market Higher Than Last Year in Many Metros, but Homes Are Still Moving Historically Fast in General
• Signs of Softening Price Growth Are Emerging

Click here to read the entire Realtor.com July Housing Market Report

What we learned this week:

• Mortgage purchase applications are down 18% 
• New home sales declined 17%
• Introduction of single family homes declined by 16%

What’s that mean?

Even though we saw declines, we are still not in a balance market. 

Brian Neeley with BusinessNews says, “Inventory levels remain 49% below July 2019 levels, giving most sellers enough leverage – at least for now – to hold off on a bottom-market selloff earlier this year.”

Every quarter, Moody’s Analytics calculates an “overvalued” or “undervalued” figure for approximately 400 markets. The firm aims to find out whether fundamentals, including local income levels, can support local home prices. 

In the first quarter of 2022, Moody’s estimated that the average regional housing market was “overvalued” by 23%.

Moody’s Chief Economist Mark Zandi said Good luck The housing market being “overvalued” by more than 25% is likely to see a 5% to 10% drop in home prices. If a recession occurs, prices in those markets could fall by as much as 15% to 20%.

Click here to read more about Zandi’s predictions! 

Is the power shifting in the market?
Taylor Marr, the deputy chief economist at Redfin, says, “As sellers adjust their behavior it’s already changing the housing market.”

“The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” Marr said in a statement to Insider, adding that a lot of home sellers are already beginning to drop their asking prices.

Will home prices come down quickly?
NextAdvisor produced an article this week that says, “Experts say it’s unlikely prices will drop in any significant way nationwide anytime soon. And while the rate at which home prices are rising will slow, that’ll likely come because fewer people can afford to shop in a pricier market. On a local level, individual markets might see prices come down, but experts say a big drop across the board is unlikely barring a big economic shift.”

The Joint Center for Housing Studies of Harvard University published The State of the Nation’s Housing 

The report is very interesting, but a bit dense, so we compiled a few of the most interesting pieces (with page number references) below!

Housing construction at an all time high (page5)

“Single Family stats hit 1.1 million in 2021, exceeding the million-unit mark for the first time in 13 years. Multifamily starts were also at a 30-year high of 470,000 units. The last time housing production was nearly as high was 1973.”

The outlook (page 8)

“Assuming that the Federal Reserve can take runaway inflation without causing a series downturn, the near term outlook for housing demand is largely positive. Demographic shifts are favorable, unemployment is low, and wage growth remains strong. Conditions on the supply side are also encouraging, with supply-chain delays diminishing and a record number of homes set for completion in the coming months.”

Home Price Appreciation Set New Records in the Past Year (Page 9)

“This song trajectory left home prices 38.6% above their early 2020 level and more than double the 2012 low. Indeed nominal home prices stood 59.5% above the mid-2000s peak early this year while the real home prices were up 14.4%.”

For sale inventory at an all time low (page 11)

“Fewer existing homes were available for sale in January 2022 than at any point since the late 1990s.

Home Equity Growth (page 27)

Housing Challenges (page 37)

Section 6 of the The State of the Nation’s Housing  presents some of the challenges we may face in the future.

Click here to read the entire State of the Nation’s Housing Report.

Everyone is wondering, “How will interest rate increases effect both buyers and sellers?”

We’ve pulled together some statements from industry experts to help keep you informed!

For Buyers:
Business Insider provides a general rule of thumb – every percentage point increase in interest rates corresponds to a 10% decrease in purchasing power. In other words, a buyer who could afford $2,000 monthly payments on a $414,000 home with a 3% mortgage, could only afford a $320,000 house with a 6% mortgage.

Jacob Channel, LendingTree’s senior economist states, “Though it’s unlikely that home prices will majorly slump, an increase in housing supply will likely significantly slow home price growth and give would-be buyers more housing options to choose from.”

For Sellers:
Mark Zandi, the chief economist at Moody’s Analytics, says, “I don’t expect a collapse in house prices,” he says. He is not predicting a housing crash anything like what we saw 15 years ago, because of two fundamental forces supporting home prices.

The fundamental forces supporting current home prices are:
1. Supply – there is a shortage of homes available
2. We no longer have reckless mortgage lending – people can afford their loans.

Have any specific questions – email us at info@jasonwhiteteam.com and we’ll do our best to answer them!

Banyan Hill says, ” the Housing market isn’t crashing!”

Google searches for ” Housing crash ” have surged in recent years.

It’s easy to understand the concern- home equity accounts for 65% of the net worth of the average American.

The latest data shows why a housing market crash isn’t a concern:

Homebuilder’s got a wake up call.

New home sales dropped by 16.6% between March and April which supplied the largest inventory in new homes since 2010! It would take 9 months to sell out inventory at last month’s sales pace.

The stage is set for higher home prices

Low levels of existing inventory will continue to drive prices. 

Demand remains high

Future demand should remain strong due to to rising rents. 

Steven Fernandez, research analyst for Strategic Fortunes, says “Keep in mind the rapid growth we’ve seen since 2020 is an anomaly. I wouldn’t bank on growth of that magnitude to continue”

Check out our blogs on the Sevier County, TN real estate marketing statistics and national housing market statistics.

Realtor® Magazine released an article this week acknowledged the recent tumble of lumber prices, to the lowest level in 2022!

Lumber fell below $800 per thousand board feet on Monday, and prices are down 30% to date this year.

It might not be time to celebrate yet, while lumber prices are down, they are up significantly from historical levels.

According to National Home Builders Association data, volatile lumber price swings have been blamed for pushing up the average price of a single-family home, causing more than $18,000 of that over the past year.

“We expect prices in the long term to be challenged with the affordability and rising interest rate headwinds,” Kyle Little, COO of Sherwood Lumber, told Market Insider.

Feel like you might be noticing some similiarities?

Fortunately, today’s circumstances are driven by very different reasons! 

In 2006, the lending practices were much more lax. Underwriting was more loose and there were different mortgage products such as adjustable-rate mortgages with big balloon payments due at the end of the term. 

“Today it’s really just about lack of supply,” says Robert Dietz, chief economist at the National Association of Home Builders.

There are two main ways homes enter the market and both of them are not in full flow. 

1. Builders are struggling to catch up. 

Deitz blames the constraints in the market to what he calls the “five Ls”:

• Labor
• Lots
• Lending
• Lumber and building materials
• Laws and regulations

2. Fewer people are selling.Feel like you might be noticing some similiarities?Fortunately, today’s circumstances are driven by very different reasons! 

A survey by Discover Home Loans found 79% of homeowners would rather renovate their homes than move.

There are more buyers deciding that home ownership is for them! 

Part of that is millennials entering the market and part of that is due to the fact that the pandemic has made remote and hybrid work possible for many. 

When will the market slow down?

Experts surveyed by Zillow predicted it’ll be two years before monthly inventory returns to pre-pandemic norms. They estimated it could be 2024 or 2025 before the portion of first-time buyers again reaches the 45% seen in 2019.

Will rising mortgage rates slow demand?

Dietz says. “The bidding wars are going to cool off.”

Any slowdown caused by higher mortgage rates will make the market a little easier for buyers who are patient, Fairweather says. “By end of summer there should be more homes on the market as not as many buyers will be taking them off the market,” she says.

The market could be in for a shift this year as it copes with higher mortgage rates, Fairweather says. You may want to slow down and consider your options. “I don’t think it’s wise to try to rush the market now because right now the market is adjusting,” she says.