The US housing market fell into a housing recession after mortgage rates spiked. The levels of housing activity are contracting. History shows that an inflation-fighting Federal Reserve will cause a housing recession in the near future.
Home pricecorrections are less common than housing recessions. Housing bulls refused to acknowledge the possibility of falling home prices, just like they did in 2006 They are incorrect once again.
John Burns Real Estate consulting gave data to Fortune that showed that frothy markets like Phoenix had already gotten their home price tops blown-off. Home price correction has moved beyond overheated Western housing markets.
Home values in 98 of the major regional housing markets have fallen from their peaks. The Burns Home Value index has fallen in 11 markets. The US home price correction is more widespread than thought.
Home prices will fall even though there are not as many houses for sale. According to Rick Palacios Jr., head of research at John Burns Real Estate consulting, that is an interesting thing that is starting to surprise people.
Home prices didn't fall until inventory levels went up. Home prices are falling even though inventory is still very low. How could that happen? Mortgage rates went up and home prices went up, pushing the housing market to new heights. Buyers are taking a back seat.
We think that housing is going to have a reset mode if mortgage rates stay elevated for a long time. Right now, the affordability mechanism needs to be reset on home prices. There are a lot of markets where we think that home prices will fall double-digits.
The housing markets that have been hardest hit by the housing slump are in one of two groups.
The first is high cost. San Francisco, San Jose, and Seattle have seen the largest drops in home values. Their tech sectors are more rate sensitive than their high end real estate markets.
Austin, Boise, Phoenix, and Reno are in the second group. The Pandemic Housing Boom saw home prices go far beyond what local incomes would historically support. Historically speaking, as a housing cycle "rolls over" it usually hits the most over-valued housing markets the hardest.
There have been 98 markets that have fallen from their peaks. The majority of those markets are on the East Coast. Newark and Louisville saw modest price gains during the housing boom. Florida is home to eleven of these markets.
Falling home prices doesn't mean it won't happen. John Burns Real Estate consulting predicts that U.S. home prices will fall in two years.
Home prices are expected to fall up to 5% this cycle. Moody's Analytics expects a decline in the housing markets. No recession is assumed by that call. Home prices are likely to fall between 15% and 20% if a recession happens.
Several research firms have predicted falling home prices in the U.S. No one is predicting a repeat of the last housing downturn in the U.S. Home prices fell 27% between 2006 and 2012
It sounds really bad, but the reality is that the markets have run-ups of 30%, 40%, and 50% over the last year or two. We compressed the home price appreciation into a couple of years. Even if our forecasts are correct, we're only going to reset home prices to what they were in 2020 or early 2021.
You can skip to the 9:00 minute mark if you want to listen to the entire interview. You can stay up to date on the housing correction by following NewsLambert on social media.
High-end home sales have decreased at a faster rate than other price points. Average and median home sales prices are skewed by that. For both new and existing homes, the Burns Home Value Index helps to shift out that noise. Preliminary results of August 2022, are available.
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