The 2022 housing market has been unpredictable, to say the least, and you may be hearing the word “recession” thrown out here and there, but the question at large is whether we are on our way toward that recession or a hopeful housing correction. Experts say it’s too soon to know but they are looking at various conclusions. Indicators include, “everything from the Federal Reserve’s hawkish stance on interest rates to the sentiment of homebuilders, real estate agents, and buyers on their gut feelings on where the market is heading,” said Florida Realtors. Read those conclusions here.
What we do know is that mortgage rates rose to their highest level in two months the week of August 29 to 5.66%, and homeowners looking to refinance their home jumped to 4.98% from 4.85% – the rate at this time last year was 2.18%. “The increase in mortgage rates is coming at a particularly vulnerable time for the housing market as sellers are recalibrating their pricing due to lower purchase demand, likely resulting in continued price growth deceleration,” said Sam Khater, Freddie Mac’s chief economist.
The government has reported the U.S. economy shrank at a 0.6% annual rate between April and June of this year, a second straight quarter of economic contraction which meets one informal sign of a recession, although most economists doubt the economy is on the verge of a recession, given the robust job market.
Meanwhile, a typical home in the U.S. is now selling for less than the asking price for the first time in a little over one year. “The average sale-to-list ratio fell below 100% for the first time since March 2021 and the share of homes with a price drop came down from its record high. With mortgage rates ticking back up, expect the post-Labor Day slowdown to be even more intense than usual,” reports Redfin.
While prices are decreasing nationwide, that isn’t the case for all states. There are still year-to-year price increases in Florida’s gulf coast. Tampa Bay’s prices increased 29.6% following Cape Coral/Ft. Myers at 36% and North Port/Sarasota/Bradenton at 36.5%.
To help the housing affordability crisis, Tricon Residential Inc. and the Arizona State Retirement System have invested $500 million to build 2,500 single-family rentals in the U.S. Sun Belt. “The United States has a housing crisis that cannot be ignored,” said Gary Berman, CEO, and president of Tricon. “Americans are facing a shortage of nearly four million homes, and families are struggling to find and afford quality housing.
The housing market remains confusing, the good news is there are 4 positives about today’s housing market. 1) rising interest rates can benefit both sellers and buyers, 2) low supply and inventory creates high demand, 3) housing is expected to appreciate, and 4) the solution to affordable housing is building more “starter” homes which is recognized and in the works. Read more here.
