Why the housing market is NOT crashing
Is the housing market crashing? Or is it simply correcting? Will we see a sudden surplus in housing inventory which would cause prices to dramatically shift?
To find out what’s going on in the housing market let’s look at the experts in the field, including California Association of realtors, realtor.com, National Association of Realtors and more.
According to the California Association of Realtors, with mortgage rates steadily coming down after reaching a recent peak in mid-June, the market began to show some signs of stability as purchase mortgage applications remained unchanged from the prior week. Home sales remained depressed from the prior year, however, as economic uncertainty and higher borrowing costs continued to expand their role in homebuyers’ decision to purchase.
With inflation remaining high and the economy expected to pull back, the market will normalize further in the second half of 2022 with softer sales and more moderate price growth.
According to Freddie Mac’s Primary Mortgage Market Survey (PMMS), the weekly average 30-year fixed-rate mortgage as of June 30, 2022, came down to 5.70% from 5.81% in the week prior. The decline in mortgage rates in recent weeks boosted the mortgage application volume up for the week ending June 24 by 0.7% from the prior week. The weekly gain was due primarily to an increase in refinancing activity, as the Refinance Index ticked up 2% from the week before. Purchase applications, on the other hand, were essentially flat from the prior week and were 24% lower than the same week one year ago. Overall purchase activity continued to be weakened by elevated rates, higher homes prices, and growing economic uncertainty.
There is no denying that increased mortgage rates are making buying a home a more difficult option for many home buyers. With the increase from last year’s super low rates to today’s rates, the average mortgage payment has gone up an average of $6,000 nationally per year- making home ownership harder to reach for many.
Consumers were less positive about the state’s housing market conditions in June than they were in prior months. Results from the C.A.R.’s latest monthly sentiment survey show that 79% of the consumer respondents believe that the overall economic conditions in California will not improve in the next 12 months, while 85% believe that interest rates will not fall within a year. Only 14% of the respondents think it is a good time to buy a home, a slight increase from the record low reached in May, but still a sizable decline from last June’s 19%.
According to Realtor.com the housing markets are headed for a reset as we move into the second half of the year, with rising supply blending with cooling demand. looking at their June inventory report shows that more homeowners are listing their properties for sale, boosting inventory for the second month in a row.
More new listings entered the market in June compared to last year, though slightly down from May new listing growth.
Newly listed homes were up 4.5% nationally compared to a year ago, and up 3.1% for large metros over the past year.
Sellers listed at roughly the same rate as 2017 to 2019, prior to the pandemic, up slightly by 1.0%. Housing remains expensive and fast-paced with the median asking price at a new high while time on market is up just one day from last month’s record low.
The June national median listing price for active listings was $450,000, up 16.9% compared to last year and up 31.4% compared to June 2020.
In large metros, median listing prices grew by 13.3% compared to last year, on average. Nationally, the typical home spent 32 days on the market in June
Overall, what we are seeing is more of a correction to a NORMAL market – home prices STILL INCREASED 9.9% annually! while that is NOT the 22 plus percent we had during the pandemic, this is still higher than the normal 3-5% gain.
Always make sure you are comfortable with your monthly payments when buying a home, being upside down on a home is no fun! But, with a steady price increase annually, home buying is still a great investment. Check out my video on how to come up with your monthly mortgage budget- POINT
Sellers, pricing your home and getting your home market ready is more important than ever. the days of listing and getting multiple offers with no effort are DONE! Now staging, and making sure you price your home is crucial to an easy sale. Check out videos on how to sell your home in San Diego HERE.
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