After more than a year of escalating demand and soaring prices, many experts believe that the record-breaking housing market is finally beginning to cool off. So, is the housing boom ending? Are we headed for a market crash? Or are home prices just correcting in line with a long upward trend? I’m here with all the answers…Hey there, Jenevieve Croall here with JLUX Homes Realty Group. You may have noticed that there seems to be a shift underway in the housing market. After almost two years of consistent price increases, this boom we’ve been experiencing looks like it is finally running out of steam. How do I know? Well, there are four clear signs that the housing market is starting to slow down.
#1. Increased Inventory of Homes for Sale. Since 2019, demand has far outpaced the supply of homes and available rental properties. But starting the month of May, things changed. According to data from Realtor.com, more new property listings entered the market in May than any other month since June 2019, and active listings are up 13% from last year.
#2. Price Reductions. This month has also seen substantial discounts on expected asking prices across the country. Previously, bidding wars almost guaranteed the owner would get above the asking price. But as inflation and the cost of living increase, competition is dying off, prompting some sellers to have to reduce their asking price. The average price cut now sits at 10.5%, much higher than the 6.2% in May 2021.
#3. Mortgage Rates Are Up, and Applications Are Down. The sudden and dramatic mortgage rate increases this year have impacted the total number of home loan applications received. In fact, the Mortgage Bankers Association reports that application numbers were down 16% from June 2021. This decline is likely to continue as mortgage rates inevitably increase again this year.
#4. Fewer People Shopping for Homes. Inflation, higher mortgage rates, and increased cost-of-living pressures mean fewer people are shopping for houses. Agents have reported declining home inspection requests – down 14% from June last year. While the demand might be there, some buyers have been priced out of the market.
In conclusion, Are we heading towards a crash? No. Is the market correcting? Not really. So far, what we’re seeing is just a turning point toward more typical, pre-pandemic levels. But every market is cyclical, and every area and price point are different. As your real estate expert, I will be sure to keep you updated on the latest, so stay tuned for future videos. If you have questions about how to positioning yourself as a buyer or seller in this market, give me a shout. I can guide you through the best possible outcome given any market.
