Major Shift in the Housing Market - Housing Market Crash 2022

Major Shift in the Housing Market - Housing Market Crash 2022
If you have been holding on tight to your real estate dreams, YOUR WAIT IS OVER!
At long last, the housing market shift is here, and if you are one of the rare individuals who has held firm throughout the insanity of the past year-plus, the time is finally right to make your move and start pursuing that deal you have been looking for!
I’m talking about the market shift in housing.
Yes! Finally, the trends and statistics are leaving no doubt that after months and months of skyrocketing prices and supply flying off listing pages before you could even schedule a showing, things are starting to correct. The whirlwind of rising prices is finally slowing down.
The US Census broke the news just three days ago that New Residential Sales dropped 16.6% in April 2022, a huge downturn. The March estimate was for 709,000 sales, but we saw fewer than 600,000 actually processed. This is the fourth straight month that new home sales have fallen, and we are down to the lowest level of new home sales since before the pandemic!
With mortgage rates touching 5.25%, people have finally reached the tipping point on how much they can actually afford over the long term and the rising costs of purchasing a new home.
The sharp drop in new home sales should see builders backing off those super high prices month after month because it is simply no longer sustainable. Twelve months ago, the average 30-year fixed-rate mortgage interest rate was 3%. That means it’s jumped 75% in a year. With so many people still struggling financially to recover from the pandemic, there are not enough buyers in the market who can take on that sort of massive financial commitment.
When Pantheon Macro’s Chief Economist Ian Shepherdson saw these new home sales statistics, his immediate response was direct and deliberate.
He said, “In short, the party is over, and the article reads that the collapse in sales follows a steep downward trend in mortgage applications as mortgage rates start to rise on the heels of the Federal Reserve interest rate hikes that began in March.
So far, the prices of sales for existing homes haven’t seen the same drop-off as the point of pressure being applied to new home sales. So be careful if you think you’re going to just jump into the market and get a steal. People selling their homes are still looking for a big score, and most of them are selling because they are trying to upgrade to their next residence. But that’s becoming more and more of a double-edged sword. They want those record prices when they sell, but their new homes are just as expensive, and mortgage rates have skyrocketed above 5%.
With the significant rise in the mortgage rate, people are taking that long pause before selling because everyone is getting into that “wait-and-see mentality.” If sales start to slow and demand starts to catch up, the interest rate should start trickling down, and better deals will be available in the long run. The latest survey from the Mortgage Bankers Association confirms this. Mortgage applications fell 15.2% year over year for May 13. The US Department of Commerce sees the number of housing permits fall, down to a five-month low of 1.8 million in April.
Basically, the housing market has priced many people out of the housing market. People who can afford to invest a few extra hundred thousand dollars over their previous price point would have been getting their homes and settling in. More sellers are trying to get in on the selling party, but they have arrived too late to get the premium deals - they want top dollar for their homes, but there are fewer and fewer people left who can afford to pay top dollar.
With people slowing down their runs on buying, we will start seeing a correction as prices flatten. Most experts don’t see this as another bubble bursting, which is good news for anyone currently in a home, but we are seeing major metropolitan areas where prices are falling. I’m talking about places like Rochester, Chicago, Los Angeles, Memphis, Pittsburgh, and Detroit. These aren’t just slight declines, either, but major shifts. Prices are down 17% in Rochester, almost 14% in Pittsburgh, and more than 15% in Detroit.
👔 Ron Cohen
📱 Call or Text us: 201-240-2991
🌐 Website: roncohen.kw.com/
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#housingmarket #housingmarketupdate #housingmarket2022
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