Mike is one of the more level-headed analysts, probably due to the wealth of national data he processes. There will probably be a solid undercurrent of activity as evidenced in the graph above:
Prices, meanwhile are still strong. 5 bidders instead of 50 bidders will still support your asking price. Prices holding up stronger than I expected frankly. $449,000 for the median single family home in the US now.
Mortgage rates didn’t get into the fives until early April, and up until then, the frenzied-out buyers were grabbing something at any price. The June index will show the full effect, which we’ll get at the end of August.
San Diego Non-Seasonally-Adjusted CSI changes
“Those of us who have been anticipating a deceleration in the growth rate of U.S. home prices will have to wait at least a month longer,” says Craig Lazzara, managing director at S&P DJI. “All 20 cities saw double-digit price increases for the 12 months ended in March, and price growth in 17 cities accelerated relative to February’s report.”
The expectation is that prices will begin to ease, since home sales have been falling now for several months. Demand, however, is still high, and real estate agents report that they are still seeing multiple offers for homes that are priced well. More supply is also coming on the market, as sellers worry they will miss out on the last days of the hot market.
“Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer. Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call,” added Lazzara.
In recent weeks, the housing market has shifted, said Danielle Hale, chief economist for Realtor.com. “As buyer confidence sags and weighs down demand, real estate markets will re-balance, eventually tilting away from the heavy advantage that recent home sellers have enjoyed.”
(The San Diego seasonally-adjusted index was 416.51)
I mentioned how overshoot is part of the program. It will be a miracle if the sellers’ expectations can adjust quickly enough to salvage the rest of the selling season.
It’s probably never been so hard in the history of real estate to get the list-price right!
Even if the price is ‘right’, a new listing might not sell right away just because of buyers wanting to wait-and-see for a while longer. Sellers won’t know what to do, so they won’t do anything and they will wait-and-see too. Only a few might drop their price enough to make a difference.
Nine-year-old G.T. Struck stepped in front of the upright headstone at Fort Rosecrans National Cemetery and waited.
His father, Thomas Struck, read out loud the name on the marker and handed the boy a small American flag attached to a pointed wooden stick.
G.T. put the toe of his right shoe at the base of the marker, measuring where the flag should go. He bent over and stuck it in the ground behind his right heel. Then he straightened up, bowed his head for a moment, and saluted.
The headline writers are having fun with the current real estate market. They must challenge each other with whom can come up with the most outrageous headline, regardless of what’s in the article.
In this week’s article, he says, “that we’ve officially moved from a housing boom into a “housing correction.”
“The housing market has peaked…everything points to a rolling over of the housing market,” Zandi says. “In terms of home sales, they’re falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets.”
But further into the article, they lay out the caveat that you see in every doomer article:
To be clear, Zandi doesn’t see a 2008-style housing bust or foreclosure crisis. While the spike in mortgage rates has pushed the housing market into the upper bounds of affordability, we don’t have the credit issues that plagued us last time. Homeowners are financially better off than they were in the lead-up to the 2008 financial crisis. This time around, Zandi says, we also don’t have widespread subprime mortgages. Also, if nationwide home prices do begin to plummet, he says, the Fed could always ease up on mortgage rates.
That said, Zandi says some regional housing markets have become historically “overvalued” and could see home prices decline 5% to 10% over the coming year. If a recession does come, Zandi says price drops in those markets could grow to between 10% to 20%.
Buried further is the map (above) that shows the areas with the greatest odds of home-price declines. There aren’t many, and none are in California.
None of these analysts want to consider that to have home prices decline, there has to be sellers who will sell for less. It’s much more likely – like 10x more likely – that our market will just stall out as sellers wait it out, rather than take less. They’re not going to give it away!
Their most popular markets are suburban areas that are 30 minutes from the nearest city center? Sounds like Carlsbad/Encinitas! From Zillow:
Zillow’s most popular market so far this year is Woodinville, Washington. Burke, Virginia and Highlands Ranch, Colorado round out the top three.
Every city in Zillow’s latest 10-most-popular-markets list is a suburban area roughly 30 minutes from the nearest city center. Home values are growing faster in each of these suburbs than in the principal cities in their metro areas.
Remote work is a key reason suburban home values are now growing faster than those in urban areas as home buyers are prioritizing space and affordability over a short commute.
Zillow’s most popular market of early 2022 is Woodinville, Washington, leading a list of fast-growing suburbs as the most in-demand places of the first three months of the year. Following close behind were Burke, Virginia, in the Washington, D.C. area; Highlands Ranch, Colorado, outside of Denver; Westchase, Florida, near Tampa; and Edmonds, Washington, also in the Seattle metro.
The most popular markets so far this year paint a picture of how remote work has changed the U.S. housing landscape. Demand for suburban homes found an extra gear last summer, causing suburban home values to grow faster than home values in urban areas, a reversal from previous norms and from the first 15 months of the pandemic. Remote work is a driving force behind this shift, prompting home buyers to prioritize affordability and space over a short commute.
The suburbs that beat out all others to make the top 10 of Zillow’s most popular markets of Q1 are seeing home values grow faster on a quarterly basis than the principal city in their metro area, indicating stronger demand. Most of them have more expensive homes than their nearest major city, and several are significantly more expensive. Eight of the top 10 have a typical home value higher than their nearby principal city, and seven of those have a typical home value more than $150,000 higher.
Regionally, Havertown, Penn. outside of Philadelphia is Zillow’s most popular market in the Northeast, edging out four Boston suburbs: Billerica, Framingham, Waltham and Arlington. In the central region, Ballwin, Missouri,. is joined in the top five by Grand Rapids, Michigan, and three pricey Dallas suburbs: Coppell, Plano and Prosper. Denver suburbs dominated the mountain region, taking the top eight spots in Zillow’s rankings.
We’re going to be hearing for months about how sales are dwindling.
It’s mostly due to comparing 2022 stats to last year’s numbers, which were the most frenzied-up numbers ever. But it is also due to it being a market for the affluent now.
Look at the chart above. Even though sales are down 7% overall, the higher-end sales are booming:
San Diego County Detached-Home Sales, Jan 1 – May 31
SD County Detached-Home Sales
Sales Over $1,000,000
As recently as 2019, the million-dollar sales were only 18% of the total sales count. This year, it’s 46%, and we still have a week more of sales plus late-reporters to record. It could hit 50%, just three year later!
Yet the total number of 2022 sales will only be 10% to 12% behind those in 2021, the craziest year ever.
Plus, if there were more quality homes for sale priced over $1,000,000, we’d have even more sales!
Why realtors don't get - or deserve - any respect. Our leaders publish articles that make no mention of how much prices have come down. Instead, they pretend it didn't happen. Rates at 5.65%? You can do way better than this - let's get real. @NAR_Research