Home prices weakened month to month, according to Black Knight. While still gaining, which they usually do at this time of year, the gains fell below their 25-year average. This after significantly outdoing their historical averages from February through June. It’s a signal that a slowdown in prices may be underway again.
Behind the cooling off: mortgage rates. They rose sharply last summer and fall, causing prices to drop. They then came down for much of the winter and a bit of the spring, causing home prices to turn higher again. Now rates are back over 7% again, hitting 20-year-plus highs in August.
Add to that, new listings rose from July to August, atypical for that period of the year. Some sellers may be trying to cash in on these historically high prices. Active inventory, however, is about 48% below the levels seen from 2017 to 2019.
“While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high mortgage rates putting a damper on demand,” said Danielle Hale, chief economist for Realtor.com.
The jump in home prices since the start of the Covid pandemic, combined with much higher mortgage rates has crushed affordability.
It now takes roughly 38% of the median household income to make the monthly payment on the median-priced home purchase, according to Black Knight. That makes homeownership the least affordable it’s been since 1984.
Oh look, a version of the article everyone seems to put out regularly for the last 2+ years or so. My mortgage is a 3.125% rate. If I move and buy the same house my payment goes up 50% just on interest. They’ll drag my dead body out of this house with current interest rates.
This is literally the vast majority of homeowners right now. No one is selling. Inventory levels have been at historic lows for a reason. The only way the housing market sees a significant downturn is if the economy as a whole eats shit and people can’t pay their mortgages.
At my current rate, I would rent out my house, and sleep in the driveway before I sell because of a job loss etc.
Why would anybody ever sell their house if they have a pandemic mortgage rate of 3%? Because now rates are like 7%, you’d be losing so much money. Only way you should sell is if you’re paid off, and are buying in cash. But in that case, it wouldn’t really affect the market.
Yup, we’re not moving for largely that reason. We have a good rate in a good area, and while we’d prefer to move somewhere else, I’m not paying these interest rates.
If prices were coming down commensurate with rates increasing you could make a lateral change and buy the same amount of house for the same amount of money, but raising rates has only slightly reduced the rate house prices are increasing, rather than bring them down. It’s insane. Every month is the new worst time in modern US history to buy a house. It sucks for property owners too because taxes based on fair market value are rising crazy fast as well.
Would be super fantastic if y’all could include geography in articles like this. Even narrow it down by continent if you’re really just trolling for clicks.
I intentionally left out the location.
Personal finance, like legal advice, is region specific. Like Reddit, there are PF communities, like [email protected], to get specialized advice. The main community is treated as US centric.
Curious what others think.
Personal finance is about personal finance. This community is not region specific. There are people from all parts of the world here. Kindly specify the general location in the post; that would be very helpful.
This should be a rule in the sidebar so people know before posting.
It’ll drop a few percentages, this allowing predictions to be true… but then rise dramatically.
Look at the past 50 years and every ebb and flow.
I doubt it. Had a friend try and get into a house last month. Things had cooled off. Was listed at 1.1 and they offered .8. Offer accepted, then they got cold feet and backed out. It just sold for .95. They feel like idiots.
Prices cooled for a bit. I think that’s done. Its going to be very market specific, but in markets that are suffering any kinds of climate related loss of structures (California, Oregon, Washington, Florida, Hawaii), don’t expect any significant reductions in home price. Now what happens in the insurance markets as a biproduct of new legislation and how that effects both rates and availability, that’s whole separate ball game. But as far as the desirable areas of the country, I think that dip we saw was pretty much it. Expect no more rate hikes after then next 8-12 months. Wages will be gobbling up their portions of inflation as things smooth out from the preposterous amount of money injected into the system during covid. I would expect homes to be up 30-50% over the next 4-10 years. The only thing I think that could prevent that is a collapse of the insurance markets, which, does look possible in California.
This is the best summary I could come up with:
The latest read on home prices shows they hit another all-time high in July, rising 2.3% from the same month last year, according to Black Knight.
“In addition to monthly gains slowing below long-term averages, Black Knight rate lock and sales transaction data also points to lower average purchase prices and seasonally adjusted price per square foot among recent sales,” said Andy Walden, vice president of enterprise research at Black Knight.
“All of these factors combined underscore the need to focus on seasonally adjusted month-over-month movements rather than simply relying on the traditional annual home price growth rate.”
“While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high mortgage rates putting a damper on demand,” said Danielle Hale, chief economist for Realtor.com.
The jump in home prices since the start of the Covid pandemic, combined with much higher mortgage rates has crushed affordability.
It now takes roughly 38% of the median household income to make the monthly payment on the median-priced home purchase, according to Black Knight.
The original article contains 385 words, the summary contains 175 words. Saved 55%. I’m a bot and I’m open source!
doubt
I concur! Western economy is based on ever growing real estate prices. If these prices stop growing or decline - it means we have much bigger problems.
