According to leading analysts in the industry, the housing market is showing signs of cooling. While housing prices are still higher than two years ago, demand is beginning to wane, and sellers are beginning to reduce their prices, which could be signs of relief for weary buyers. Here are the latest market predictions from the pros:
Price Appreciation and Mortgage Rates
“Homes are still selling at higher prices than earlier in the year, but the pace of appreciation is slowing,” says chief financial analyst at Bankrate, Greg McBride.
Senior Zillow economist Jeff Tucker commented, “Prices are still growing, just not as fast as we’ve gotten used to over the past two years. Prices may dip below today’s record highs in some markets later this year or next, but buyers shouldn’t expect to see home prices dropping to anywhere close to pre-pandemic levels.”
Lawrence Yun, the chief economist for the National Association of REALTORS®, predicts that “if inflation turns ugly and the Federal Reserve has to be even more aggressive, then mortgage rates could top 7% and actually halt home price gains.”
Fewer Home Sales
Danielle Hale is the chief economist from Realtor.com, and her thoughts are: “We move into the heart of vacation season in July and August when buyers and sellers shift priorities away from housing moves. This can sometimes lend itself to a slower market pace, and I expect that the impact of higher mortgage rates will coincide with this season to result in a bigger pullback than usual in sales activity, but home prices still have a lot of momentum and are likely to continue to grow.”
More Inventory
The biggest story lately is the increase in housing inventory. Home and mortgage expert from NerdWallet, Holden Lewis, stated, “The number of homes for sale began rising in May, and this trend will continue through July, meaning buyers will notice that they have more choices and more negotiating leverage.” He added that “buyers who remain in the market will face less competition and have more homes to choose from.”
What Does it all Mean?
On the one hand, high home prices combined with the rise in mortgage rates have priced more folks out of the market. On the other hand, this can only last for so long. We find ourselves watching an awkward stand-off between the Fed and home sellers. It makes sense to buyers that the price of homes be reduced to compensate for higher mortgage rates, while it makes sense to sellers that mortgage rates be reduced to keep buyers in the market. Who do you think is going to win? One thing is certain about this market shift: buyers and sellers need an experienced real estate agent who knows how to adapt to these changes and whatever comes next. Sellers need to begin thinking more realistically about the condition of their homes as they go on the market. Buyers must embrace that they will continue to have more options and negotiation power as inventory continues to rise. And, most importantly ~ remain calm!
I am here for you if you have questions or concerns about where you stand right now. Call me at (830) 305-5248 or email me at krista@bloomrealtytx.com, and I will guide you through this market shift.
