In my neck of the woods, asks are no longer being met. Prices are dropping due to insurances increasing:
Fortune headline: The housing market is weakening fast—but there are no signs yet that a 2008-style crash is coming
June 26, 2022 7:00 AM EDT
It’s no wonder that Americans are confused by the blizzard of seemingly contradictory news, data and forecasts on the housing market’s future. On the positive side, we’re still witnessing record monthly price increases, and inventories continue to record never-before-seen lows, a seeming positive for values going forward. Existing home sales, though down from the blockbuster heights of early this year, are still running close to the strong numbers posted in late 2019. Put simply, the current housing stats still look good. In minus column, the confluence of the 40% run-up in values since the onset of the pandemic and a sudden, near-doubling of mortgage rates from last fall to 6.07% in late June is spreading fears that home ownership has gotten so unaffordable, for such broad swath of America, that demand will collapse. If the strain from bigger prices and higher rates makes buyers retreat en masse, it could take a sharp fall in prices to move them off the sidelines. In a recent note, the Dallas Fed warns that in a number of markets, huge ratios of prices to rents, traditionally a strong sign of unsustainably inflated values, point to bubbles that are poised to pop.
So what’s the real story? The most likely outcome is that that the super-hot appreciation we’ve seen through May will cool rapidly for the rest of the year. That shift marks a major reversal from a trajectory of year over year increases that kept getting bigger by the month. But a slowdown in gains isn’t the same as a drop in prices. Quite the contrary: The fundamentals suggest values will still be rising at the close of 2022, and keep slogging ahead through next year. The rub is that as always, the outlook will be extremely uneven: In many metros, appreciation by the close of 2022 will be trailing what promises to be stubbornly high inflation, meaning homeowners, notably in the high price brackets, will be suffering the first “real” declines on their ranches and colonials in a decade or more. “Overall, the best summary is that we’ll move from a gangbusters sellers’ market to a modest sellers’ market,” says Ed Pinto, director of the American Enterprise Institute’s Housing Center. Pinto adds a key caveat. A further spike in home loan rates, and or a deep recession that stokes a big jump in joblessness, could indeed send dollar prices downwards.