Home Prices Are Rebounding

You may feel a bit unsure about what’s happening with home prices and fear whether or not the worst is yet to come. That’s because today’s headlines are painting an unnecessarily negative picture. If we take a year-over-year view, home prices did drop some, but that’s because we’re comparing to a ‘unicorn’ year when prices peaked well beyond the norm.

To avoid an unfair comparison to that previous peak, we need to look at monthly data. And that tells a very different and much more positive story. While local home price trends still vary by market, here’s what the national data tells us.

The graphs below use recent monthly reports from three sources to show the worst home price declines are already behind us, and prices are appreciating nationally.

Looking at this monthly view, we can see the past year in the housing market can be divided into two parts. In the first half of 2022, home prices were going up, and fast. However, starting in July, prices began to go down (shown in red in the graphs above). By around August or September, the trend started to stabilize. But, looking at the most recent data for early 2023, these graphs also show that prices are going up again.

The fact that all three reports show prices have been going up for three or more straight months is an encouraging sign for the housing market. The month-over-month data indicates a national shift is happening – home prices are rising again.

Craig J. Lazzara, Managing Director at S&P Dow Jones Indices, says this about home price trends: (more…)

HOW AND WHEN WILL HOUSING REBOUND?

National Association of Homebuilders (NAHB) Chief Economist Robert Dietz recently provided this housing industry overview in the bi-weekly e-newsletter Eye on the Economy.

Housing data for the end of 2022 illustrate a market continuing to weaken because of low housing affordability, largely as a result of elevated mortgage interest rates. At the start of 2023, the average 30-year fixed mortgage rate is near 6.5%, down from a near 20-year high of 7.1% in early November.

However, forecasters expect the Federal Reserve will end its path of rate increases at the end of the first quarter. This should lead to sustainable declines for mortgage rates in the second half of 2023 and into 2024, enough to spur a rebound for single-family construction.

And more construction is needed over the long term: A new NAHB study estimates the housing market is underbuilt by 1.5 million homes. (more…)

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

One of the major story lines over the last year is how well the residential real estate market performed, with  home prices are skyrocketing this year.

Which country has the fastest growth in home prices?

According to data gathered by money.co.uk (no relation to money.com, but we should probably be friends or something), the country with the highest property price increase from 2010 to 2020 was Israel, where there was a staggering 346% rise in costs per square meter.

Switzerland and Germany come next, with increases of 166% and 162%, followed by the United States at 153%. Hungary, Slovakia, France, Portugal, Japan and the United Kingdom round out the rest of the top 10, all with average home price increases of at least 75%.

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Why Is the Market White Hot? No, It’s Not the Pandemic

Today’s market problems – a shortage of affordable housing, historically tight inventory of homes for sale and rising prices – weren’t caused by the latest pandemic-caused economic slowdown. It goes back to the Great Recession.

Experts say the U.S. housing market was already being roiled by forces fueling the current housing-price explosion even before the pandemic.

Matthew Murphy at New York University’s Furman Center for Real Estate & Urban Policy said supply shortages were evident heading into the pandemic, adding that “the context here to this current housing moment is that we were still recovering from the 2008-2009 foreclosure crisis.”

Meanwhile, the National Association of Realtors® has been pointing to an “underbuilding gap” of between 5.5 and 6.8 million housing units since 2001. (more…)

Will the Housing Market Frenzy Die Down? That Depends on Sellers

The coronavirus pandemic raised the temperature considerably on the nation’s housing market. The past year has been marked by soaring prices, logic-defying offers over asking price, and steep competition as sellers have been hesitant to put their homes up for sale.

But the heart-pumping, bank account–depleting housing market frenzy could die down—at least a little—in the coming months as more sellers list their properties and inventory slowly increases. About 10% of current homeowners plan to put their homes on the market this year—and more than half are more affordably priced, according to an exclusive survey conducted by realtor.com®. An additional 16% expect to list their properties within the next two to three years.

Typically, only about 8% of homeowners put their homes up for sale a year. This is about a 25% anticipated increase, which translates into about 1.5 million more homes. The increase may be due to folks holding off on selling their homes during the worst of the coronavirus pandemic.

“There is a brighter light at the end of the tunnel for many weary buyers,” says Realtor.com Senior Economist George Ratiu.“In a market that right now only has close to half a million listings, a big boost in inventory can mean more choices for buyers and potentially a slowdown in price growth,” says Ratiu. He was quick to add that prices won’t drop, but the double-digit growth may taper off. “It’s signaling a return to normal for the economy and the housing market.”

Read the full article: Housing Market frenzy could cool for this reason (more…)

The US is 3.8 Million Homes Short

The U.S. housing market needs nearly 4 million single-family homes to meet the nation’s demand, according to a new analysis from Freddie Mac. The 3.8 million shortfall marks a 52% increase in the housing shortage since 2018.

“This is what you get when you underbuild for 10 years,” says Sam Khater, Freddie Mac’s chief economist. “We should have almost four million more housing units if we had kept up with demand the last few years.”

Lawrence Yun, chief economist of the National Association of REALTORS®, has been among real estate economists leading the calls over the last few years for greater inventory and more homebuilding to meet demand. “We need to build more homes,” Yun told NPR, adding that since the housing crisis more than a decade ago, homebuilders have been building too few homes.

The housing shortage mixed with strong buyer demand since the pandemic is prompting home prices to rise rapidly. The median existing-home price for all housing types in February was $313,000, up 15.8% compared to a year earlier, according to the National Association of REALTORS®.

Click here to read the article. (more…)