Is the Housing Market Cooling off???
Here’s a good handful of indicators that the housing market is cooling off.
- Mortgage application volume declined for the past four weeks (according to a recent survey). Meaning, there were fewer people applying for a mortgage loan over the past few weeks … marking 4 consecutive weeks of declines.
- The number of homes for sale is steadily on the rise. My records show that on March 10th 2022 there were 503 homes for sale in the Greater Antelope Valley Association of Realtors. Today, 7-29-2022, there are 1,014 homes for sale. This sounds like a huge increase (over 50%) but the housing market we just came out of was a ‘once in a lifetime’ phenomenon….. mostly COVID related. With higher inventories, buyers have more choices and with higher interest rates, sellers will have to be more flexible.
- We’re seeing a lot of price reductions as the market reshapes. For the past four months, the sales prices have been virtually flat. Home owners wanting a quick sale are either pricing their homes a little below current market value or reducing their price to get an acceptable offer. In this changing market, there’s no guarantee that the interest rates won’t jump… potentially causing devaluation.
This being said, we’re closer to the real estate market we were at in 2019, before COVID.
We’ll Keep an eye on the housing inventory and the mortgages rates. These are key indicators on which way the housing market will go. My personal opinion is… the economy is still strong; unemployment is very low, there is solid wage growth, new jobs and when we get the supply chain back under control some of the prices will come down and inflation will be more reasonable. Other than a little bump in the road, I don’t see a major correction in the housing market…. There are just too many positive signs to cause a lengthy recession, if we have one at all… (a recession is defined as …2 consecutive quarters of negative GDP)
Plus, Federal Reserve Chair J. Powell just raised the Federal Funds Rate by another 75 basis points and wall street had a party! Signaling that there may be a ‘steady as she goes’ mentality going forward. We’ll see.
If you have any questions on this or any other real estate related topic feel to call, text or email me…. And I’m never too busy for your referrals!
Take care, be safe out there and have a GREAT DAY!