Whats up everyone

We’re in the middle of the spring market which is traditionally the busiest time of the yeAar for home buying and selling, and the stats are all over the place.

When researching articles for this video, it became obvious that every location is experiencing vastly different outcomes when it comes to the housing market. 

Check out a few headlines:

Market Insider: Home prices have dropped the most in 11 years

CNBC reports Home sales fell in April as buyers contended with high prices

The Washington Post: Existing-home sale prices fall at the sharpest annual pace in a decade

Redfin: Fewer Metros Are Seeing Home-Price Declines As Lack of Inventory Keeps Prices Afloat

And then there’s Zillow: Zillow Home Value and Sales Forecast: May 2023 Expectations for easing mortgage rates, tighter inventory have driven Zillow’s home value forecast higher.

And honestly, where I am in the DC area, prices are still going higher on houses that are priced right and show well. I’m constantly in multiple offers regardless of what the interest rates are. It’s extremely frustrating for buyers who simply want to buy a house they can afford.

So, today, we’ll go through the headlines and see what each is saying.

If you couldn’t tell- I’m not so happy about the housing market right now- it just seems like the affordably crisis is just getting worse. At least where I am.

Lets dive right in

Let’s start with market insider. 

Home prices have dropped the most in 11 years with soaring mortgage rates driving away would-be buyers

According to market insider, The median US home price fell nearly 2% year-over-year in April, the sharpest drop since January 2012 according to the data from the National Association of Realtors.

They account the reduction in home prices to the rise in mortgage rates with the average 30 year fixed rate climbing from 5.25% to 6.35% over the past year according to data from Freddie Mac.

There was also a sharp drop in sales activity alongside the slump in prices, with total completed transactions for existing homes falling 3.4% between March and April and over 23% year-on-year.

They do acknowledge that the slowdown was particularly felt in the western half of the county, with prices still rising in much of the east. 

Bottom line: rates up, prices & sales down

Moving onto CNBC: Home sales fell in April as buyers contended with high prices, fluctuating mortgage rates

“Roughly half of the country is experiencing price gains,” said Lawrence Yun, NAR’s chief economist. “Even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season following the calmer winter market. Distressed and forced property sales are virtually nonexistent.”

They agree with market insider in that home sales are down but emphasize that there is still strong demand that is leading to different local and regional outcomes.

“The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.” Yun noted.

There were 1.04 million homes for sale at the end of April, an increase of 1% compared with April of last year. At the current sales pace, that represents a 2.9-month supply which is still considered a sellers market

Bottom line: Prices up, but sales are down

The Washington Post: Existing-home sale prices fall at the sharpest annual pace in a decade

In this article, they report that far fewer houses have been put up for sale, since it’s so much pricier to buy a house thanks to both pricier mortgages and higher prices for houses, which haven’t budged much. For months this has generally led to a slowdown in the number of houses sold, but the prices for homes hadn’t notched down in a significant way. 

But – the April figures show that housing prices are finally trending down citing the same data released by the NAR which says Prices for previously owned homes fell by 1.7 percent in April

“The key story is that,in terms of sales, we’re close to a bottom,” said Gus Faucher, chief economist at PNC Financial Services Group. “In terms of prices, there’s still room to fall and affordability is still a problem, particularly given the high mortgage rates.”

Faucher added that the Federal Reserve, which has raised interest rates at its fastest pace in years, will likely see the housing price drops as a promising sign that its efforts to control rising prices are paying off. And he said he also expects the falling home prices to lead to slower growth in the rental housing market.

“I think this certainly supports the idea that the Fed can take a pause in June and not raise the Fed funds rate, because they want to see how these effects work their way through the economy and in particular on inflation,” he said.

Bottom Line: Prices are down (unless you work where I work apparently) and may go down more.

Redfin: Fewer Metros Are Seeing Home-Price Declines As Lack of Inventory Keeps Prices Afloat

They go onto say that U.S. home prices are down 2.7%, the smallest decline in over a month, and prices are dropping in fewer metros. That’s because there’s so little inventory hitting the market, with homeowners handcuffed to their houses by low rates. 

On a local level, home prices are declining in 28 of the 50 most populous U.S. metros, down from a high of 32 metros at the end of April. 

The biggest price drops are in  Austin, TX (-17.8% YoY), Oakland, CA (-16.3%), San Francisco (-13.1%), Las Vegas (-11.4%) and San Jose, CA (-9.6%). 

So basically half of the most populous US metros are seeing prices go down. I bet if you look even more specifically, it will be house by house in any given metro. At least where I am.

Pending home sales are down 15% from a year earlier, but that’s much smaller than the 24% decline in new listings.

Pending home sales fell in all metros Redfin analyzed. They declined most in Seattle (-33.4%),San Diego (-31.2%), Portland, OR (-28.9%), Sacramento, CA (-27.9%), and Milwaukee, WI (-27.3%) .

And  New listings declined in all metros Redfin analyzed. They fell most in Seattle (-42.9% YoY), San Diego (-41.2%), Oakland, CA (-41.1%), Las Vegas (-40.8%) and Anaheim, CA (-39.3%).

This is because most would be sellers have a mortgage below 6% so why would they sell and then buy unless they are planning on renting or buying cash.

The total number of homes for sale have been dropping over the past two months, going against typical seasonal trends. 

“High mortgage rates continue to dictate the housing market. Although a lot of homebuyers have acclimated to rates in the 6% range and many are finding ways to lower their monthly payments, like using a 2-1 buydown, high rates are handcuffing potential sellers,” said Redfin Deputy Chief Economist Taylor Marr. “It’s hard to imagine a flood of new listings until rates come down at least into the 5s. For those who are selling now, the silver lining of giving up a low rate is that hardly anyone else is doing the same thing. That means buyers, who are hungry for new listings, will bite–and they don’t have much power to negotiate the price down.” 

This is exactly what I’m seeing here in Montgomery County MD and DC. Sellers are still calling the shots and buyers are getting more and more frustrated.

Redfin does point out that US homebuilder confidence rose for the 5th straight month in May, hitting its highest level in nearly a year, and permits for single-family homes rose to a seven-month high in April.  

So, there is hope that builders will provide much needed inventory.

Housing-market trends are playing out differently in different parts of the country, but agents in most metros are reporting that demand is outpacing supply. 

Even in Boise, ID where most industry experts show a huge price decline since the correction started, Redfin reports that homes that go on the market at a more affordable price point are going in multiple offers and selling for over list. They gave examples of homes listed at $400k and $650k.

And, In Fort Lauderdale, FL, home prices are up 9% year over year, more than anywhere else in the U.S. except Milwaukee. 

Sale prices increased most in Milwaukee (9.2%), Fort Lauderdale, FL (9%), New Brunswick, NJ (6.4%), Indianapolis (4.9%) and Newark, NJ (4.4%).

Bottom Line: Half the country is seeing prices go down while the other half are seeing prices continue to go up. And like I said, I”ll take it one step further- houses in the SAME area can both experience a price reduction and multiple offers. It’s the wild Wild West.

And then we have Zillow. Zillow Home Value and Sales Forecast: May 2023

Expectations for easing mortgage rates, tighter inventory have driven Zillow’s home value forecast higher.

Zillow has recently revised their home value forecast to reflect that home values will grow 3.9% in 2023. That is a significant increase from last month’s forecast. 

Monthly home value growth accelerated in April, roughly matching what would have been expected pre-pandemic for the second month in a row, helping drive Zillow’s forecast higher. 

Zillow’s long-term expectation for mortgage rates has been revised downward, which would improve housing affordability for prospective home buyers and provide a tailwind to housing demand. 

“As inventory remains a challenge in this market, home prices will experience upward pressure and affordability will remain a hurdle for buyers and sellers alike. Home builders are experiencing a renewed sense of confidence in the market given the lack of existing homes, so as spring turns to summer, hopefully the new construction market can step up and fill the gap in inventory.” Said Zillow Senior Economist Nicole Bachaud.

Bottom line:  Zillow thinks prices will continue to go up nationally due to lack of inventory. But Maybe the homebuilders can step it up and start building more to offset the gap.

So, that’s the headlines for today. 

Now, this all may change in an instant depending on what the Fed Govt decides to do. Did you catch my video from last week on the possible ramifications of the debt ceiling? If so, what do you think? If not, check it out!

Thanks for watching . Bye

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