Home and Real Estate News

The Pendulum Swing of Housing

Everywhere I go these days people are asking “what is happening in the real estate market, are we facing a crash”.  With the rise of interest rates and the current inflation those are very valid questions. 

Here are some observations and information about the current pendulum swing in the real estate market.

First, NO, we are not headed for a crash, we are starting to see a market correction across the United States, but no crash.  We are not experiencing the kind of mortgage defaults and distressed sales that would be necessary for excessive declines in housing values.  Additionally, vacancy rates are at an all-time low and mortgage underwriting quality remains high. We still have, and will for the unforeseeable future, a housing supply and demand issue.  From all indications it will take several years to add enough housing supply to balance the market.  What does a balanced market look like? A balanced housing market typically would be around a six-month supply.  Meaning, that would be the time it would take to deplete the market of the current homes for sale at the current sales rate. In today’s market we have 2.5 months of housing supply, which also equates to the continuation of a Seller’s Market.

When we hear the term housing, or market correction, what does that mean.  Economists are predicting that with the increase of interest rates some of the most overvalued housing markets will begin to see some pricing corrections.  Moody’s Analytics Chief Economist, Mark Zandi suggests that the Southeast and Mountain West are the most overvalued housing markets and are due for a correction, as well as Phoenix and Tucson in Arizona, the Carolinas, northeast Florida, and above all, Boise, the most overvalued market in the country, according to Moody’s analysis.

An additional swing in the housing pendulum is the number of millennial homebuyers, with a significant increase in millennial homebuyers over the past year.  Today millennials make up 43% of homebuyers. Boomers make up the largest share of home sellers at 42%, although the percentage of millennial sellers is on the rise, increasing from 22% to 26% over the past year.

Moving forward, current indications suggest we will experience some price corrections, and a little longer days on the market for homes.  When we say a little longer on market, instead of the 1 or 2 day frenzy, with agents waiting outside for their turn to show a property, we are seeing some properties taking a few weeks or more to go under contract.  Multiple offers are not as abundant as before; however, they do still exist.    

Owning a home even now with higher interest rates is still one of the best investments one can make.  Don’t shy away from the market, reach out to your local REALTOR® to discuss buying or selling and what that means for you in today’s market.  Wishing all a safe and blessed summer.

When you are looking to buy or sell your home, please call us at CENTURY 21 Alliance Realty 352-686-0000.

Source: National Association of REALTORS®

                 Florida REALTORS®

                 Moody’s Analytics

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