The housing market has been a hot topic in recent years. With the pandemic lockdown and the shift to a work-from-home mentality, home prices escalated, bidding wars ensued, and sales were fast-paced.
Now, many potential home buyers are waiting for the housing market to crash, thanks to higher mortgage rates and lower home prices.
Unfortunately, the real estate recession isn’t hitting as people predicted. In fact, soon after the initial downturn, home values started rising again. And now, prices have increased for three months in a row.
According to the latest Case-Shiller home price index, the housing market continues to gain strength. Prices peaked in June 2022 and then dropped until January 2023. Now, they are slowly rising again. So yes, while home values may be down compared to April 2022, it’s only by 0.2 percent and they’re on the upswing.
The National Association of Realtors (NAR) looked at the numbers differently. From February through May, the median sale prices of homes continued to drop — the first decline in almost 11 years. Even so, the housing boom lasted longer than anyone expected. In the spring of 2022, the average home price exceeded 400,000 dollars for the first time ever. Now, after the recent drop, prices are still over 100,000 dollars more than they were when the COVID-19 pandemic began in March 2020.
The housing market continues to experience a supply-and-demand imbalance as well.
With the low inventory in many areas, bidding wars have returned. With home prices projected to rise through 2024, it continues to be a tough market for buyers, especially for first-time homebuyers. Not to mention, current mortgage rates are the highest they’ve been since 2001.
The last time the housing market experienced a major downturn was 2005 to 2007. Home values plummeted, and the consequences were disastrous. When real estate took a hit, the economy followed, with the biggest crash since the Great Depression (aptly named the Great Recession). Although housing prices may continue to fall, economists don’t anticipate the same severity as we experienced nearly two decades ago.
Plus, builders remember the impact of the Great Recession and have been more intentional with their pace of construction. This conservative approach may lead to an eventual shortage of homes for sales, which could drive the prices back up.
In other words, the housing boom might be over, but the anticipated crash is more like a pause.
Let The Urban Dog Group help you with your real estate needs. Contact Christine Elias at caerealestate@gmail.com.