Housing inventory has continued to rise and is now at its highest point of the year – although, this week, inventory remained unchanged from the week prior. “In this week’s data, I had expected some inventory growth across the country because buyers have stopped cold with the spiking mortgage rates. But instead, what we’re seeing is a “tug-of-war” between buyers and sellers. Sellers just have no need to sell right now,” said Mike Simonsen, the CEO of Altos Research. As we get closer to the holidays, we may see that number drop. Hear what Simonsen has to say about who will win that game of tug-of-war.
Meanwhile, home prices across the country are declining each week, which is a normal trend for this season. The median price of single-family homes in the US is currently $434,000 and will be closer to $400,000 by the end of the year, which is still 10% higher than where we ended 2021. Altos Research looks at the historical patterns for what’s “normal” for inventory this time of year and how 2022 may differ.
While inventory is at a pivotal inflection point, the home builder’s sentiment index fell for a record tenth month in a row in October which increases affordable housing concerns with fewer new homes being built due to depressed demand impacting supply. Homebuilding materials are 38% higher than they were pre-pandemic – a factor that coupled with rising interest rates may continue to halt new home construction.
“While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates, and ongoing elevated construction costs continue to price out a large number of prospective buyers,” said NAHB Chief Economist Robert Dietz, due to the Federal Reserve’s projected rate hikes to control inflation.
Similarly, Fannie Mae announces they expect home prices to decline by 1.5% and home sales by 21% in 2023 as the Fed continues to fight inflation in their October 2022 Housing Forecast.
After two years of astronomical growth, agents are adjusting to the new normal. Keller Williams team leader Tommy Choi, RE/MAX agent Quintavius Burdette, and Red Oak Realty broker-owner Vanessa Bergmark share their unique challenges as the market shifts and how they’re preparing their clients for success.
In other news, Hurricane Ian is impacting southwest Florida in many ways and affordable housing and supply are at the top of the list for the major areas affected by the storm. At the same time, our neighbors in the Sarasota-Manatee area may see buyer demand growth as they will, “likely see a boost from the residents needing to repair properties temporarily relocating to the area. Storm damage, especially flood damage, can take months to repair,” said Chris Jones, the founder of Florida Economic Advisors. Meanwhile, investors and homebuyers are flocking to Southwest Florida for housing deals in a region where home prices have soared in recent years.
As the real estate market continues to evolve, Leslie Appleton-Young and John Tuccillo, two of real estate’s top economists sit down to talk about the current state of the housing market and what we can expect to see next.