If you have tried buying a home in the past two years, my deepest sympathies are with you. Your experience might go something like this: you found your dream home online; sent photos to your family; visited the premises (or decided to buy, unseen); put together financial statements; 10%; learned a few hours later that no fewer than 831 people had bid on the same house, which was sold to a couple who paid 50% more than the asking price in full cash and by promising to name their eldest son The contract amendment was reached after the seller of the transaction.
Yes, the U.S. housing market has historically been hellish, or historically hot, depending on whether you’re looking to buy or sell.Just about every housing stat imaginable over the past year make some kind of crazy record. The price has reached record highThe percentage of homes above asking price reaches record highThe number of homes available for sale reached record low.
but atmosphere is transforming. I counted at least three signs that the national housing market is about to experience a significant slowdown.
First, as the Fed raises interest rates in response to inflation, mortgage rates soared. In April, the 30-year fixed rate exceeded 5% for the first time in more than a decade. As borrowing becomes more expensive, so does buying.
Financing your home is still cheap if you’re in the long run. The 30-year interest rate today is lower than any month except one month (June 2003) From the 1990s to the Great Depression. But on an annual basis, rates are rising faster than at any time in 40 years. Buyers seem to have anticipated this moment.The house price index in the first phase of the late winter hit Highest monthly increase everwhich could indicate that homebuyers say “Ah, fuck it!” and make ridiculous offers to lock in cheaper mortgage rates, just before rates take off.
Second, the number of homes for sale, or housing inventory, is finally picking up after hitting an all-time low during the pandemic.
According to Altos Research, in the hottest markets like California and Colorado, the number of available homes is growing significantly faster than the national average, and the share of new listings is “immediately” (that is, within days or even hours of contracting). is rapidly declining.
Inventory doesn’t sound as sexy as house prices, but it’s probably the most important statistic to watch. “My view is that the market shift will be in inventory first, [because] Home price growth will slow as inventory builds up,” said real estate and economics writer Bill McBride.
In 2006, McBride call America‘real estate bubble When he saw stocks soaring to ridiculous highs. It doesn’t look like 2006 today, he assured me. At the height of the housing crash, inventory was about five times the market share it is now. Instead, McBride said, the next few years could be similar to the period around 1980. In response to high inflation since the 1970s, Federal Reserve Chairman Paul Volcker raised interest rates, sending the economy into a deep recession. The real estate market basically stagnated until 1982. That kind of stagnation, rather than frantically jumping into the abyss, is probably our worst-case scenario.
Finally, we can already see these technical stats – rates, percentages, inventory – in action in the real world.Google search home for sale Yes drop in major cities, including Boston and Los Angeles.Redfin Distributors in California Say Screenings and offers have fallen by double digits since last year.In Minneapolis, the screenings have rapid decline in the past month.
May and June are the most popular months for home buying in history. That means the slowdown in the housing market could be delayed by a few weeks as the spring rush plays out across the system. But come this summer, sellers who were expecting dozens of offers in a matter of days may be waking up abruptly.soon, rinse want to be a homeowner— those lucky enough to be somewhat immune to rising mortgage rates — will be able to buy without sacrificing the birthright. Things don’t feel good for everyone. But historically, they may have felt normal.