Real Estate Rundown September 2022

September 01, 2022

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Photo by Sigmund via Unsplash

The real estate industry news headlines point toward what experts are coining as the “Housing Recession.” Many homebuyers are struggling to become owners due to high mortgage rates, and this struggle is compounded by experts citing that homes have not been this unaffordable since the late 80s. Finally, Forbes compiled some fascinating studies outlining the state of U.S. markets, including markets that may be most vulnerable to a recession. 

 

Impact of High Mortgage Rates 

High rates hurt buyers more than high home prices. According to a NAR researcher - higher borrowing costs have triple the impact on monthly mortgage payments.

• Mortgage Rates Status

  • 30-year loan rises again 

  • 5.55% average mortgage loan rate (Freddie Mac)

    • More significant impact than house price increases

    • Triple the impact on monthly mortgage payments 

• Experts Cite a “Housing Recession” - In July alone…

  • Existing home sales dropped 20% 

  • Contract signings dropped 20%

  • New home sales down 30% annually 

  • Home builder sentiment slips again for the 8th straight month.

• Home Prices - Astronomical 

  • Double-digit year-over-year increases 

  • Median-priced home worth about $40,000 more than a year earlier 

  • Unaffordable - 

  • The negative cherry on top - rising mortgage rates have made home loans more expensive, adding to the cost of homeownership

  • Check out national averages for mortgage rates here

 

Housing Market Growth?

According to NAR, homes haven’t been this unaffordable since 1989. Pricing may change; however, on Tuesday, August 30, 2022, CNBC reports that Goldman Sachs predicts a sharp slow in the housing market in the coming quarters.

• Downturn next couple of quarters

  • Up 8.5% in QQ3

  • Up 3% in Q4

  • 14% year-over-year

  • 0% growth in 2023 - significant declines seem unlikely

• Home Prices 

  • June - 18% higher year-over-year 

  • 19.9% gain seen in May

  • July - down 0.77% from June (first price drop in almost three years- since January 2011)

• Home builder stocks and sentiment continue to take a hit 

  • Down 30% year-to-date

  • Even includes big names like Lamar and Home Depot 

 

U.S. Cities Seeing Most Rapid Home Price Drops

Forbes provides a fascinating compilation of a few reports, surveys, and studies on the housing market. What comes up must come down, or in the housing market’s case, what heats up, must cool or slow down eventually. These stats start to hint at just that. 

 

• Redfin Report: 

  • U.S. Cities Where Sellers Are Lowering Asking Prices

  • Dove into 97 most populous U.S. metro areas

  • One-quarter of sellers in these markets lowered home asking prices in June

  • Here are markets and what percentage of their sellers cut their asking prices

    • Boise, ID (61.5%)

    • Denver, CO (55.1%)

    • Salt Lake City, UT (51.6%)

    • Tacoma, WA (49.5%)

    • Grand Rapids, MI (49.3%)

    • Sacramento, CA (48.7%)

    • Seattle, WA (46.3%)

    • Portland, OR (45.7%)

    • Tampa, FL (44.5%)

    • Indianapolis, IN (44.1%)

 

• Redfin Survey:

  • Markets Most Vulnerable to a Recession

    • Riverside, CA, topped the list of cities most vulnerable to a recession. Riverside “has highly volatile home prices, and it was a hot destination during the pandemic, both for people permanently relocating and those buying second homes,” according to the report. 

    • Boise, Idaho, came in second.

    • Cape Coral, Fla

    • North Port Fla.

    • Las Vegas, NV 

    • Sacramento, CA

    • Bakersfield, Calif.

    • Phoenix, AZ

    • Tampa, FL

    • Tucson, AZ 

 

• Florida Atlantic University & Florida International University Study:

  • Overvalued Cities Set for a Correction

    • Boise, Idaho, topped this list with a current premium of 73%.

    •  Austin, Texas (68%)

    • Ogden, Utah (65%)

    • Las Vegas (61%)

    • Atlanta (58%)

    • Phoenix (58%)

    • Provo, Utah (57%)

    • Fort Myers, FL (56%)

    • Spokane, Wash. (56%)

    • Salt Lake City, Utah (56%)

 

Check out the full article here for the methodology of the studies or surveys and more detailed stats and projections. 

 

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Looking for real estate market data? Learn more at FMAdata.com or call 303-443-2070 today.

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