What is currently happening in the real estate housing market in the United States? (as of 8/12/2022)
A year after an astonishing 40% home sale price increase for a median home in the United States in 2021, and properties being sold in less than 24hrs after hitting the market. We are starting to see a cool down in real estate, as mortgage rates and inventory increase considerably
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What made prices go up in the first place?
Nearly everyone agrees that the main responsible factor for the skyrocketing home prices in the United States is the shockingly low number of houses up for sale. However, the disagreement comes when we ask the question…
What caused the real estate housing market’s low inventory?
This is where most people disagree, and more often than not, they blame it on one thing. In my personal opinion, I believe, it is a combination of a few things, or in other words. It was the perfect storm. Here is a list of facts, that influenced the rising prices of the real estate housing market in the United States.
- Real Estate investors (in some states) bought almost double the number of homes in 2021 than they did in 2019. This means they purchased these properties before they were ever listed for sale. For example: In Phoenix AZ, in the end, 0f 2019 (pre covid) 97,000 Houses were up for sale, and only 45,000 at the end of 2022. However, in 2021 Real Estate investors bought a whooping 5,900 houses more than in 2019. “read more“
- New construction homes shortage. This was influenced by also many factors. For example. Labor shortage, covid lockdowns, lumber price increase, etc…
- Covid. Lockdowns as well as social distancing, made “moving” a whole lot more inconvenient and challenging. Encouraging homeowners to stay at their properties for longer.
Will Real Estate housing market prices continue to go up?
In most states and cities, we are starting to see a very clear and substantial cooldown of the real estate housing market. Sellers are starting to realize, that they most likely will not be going to get an offer for the same amount they would have had at the end of 2021. And this is due mostly to the huge increase in mortgage rates. Which, in 2021 were incredibly low. This was an effort from the banks/lenders to encourage people to sell their properties, and move.
Are real estate housing market prices going down?
Data shows that prices are still going up. However, they are doing so nowhere near as fast as before. Sellers are starting to realize they will most likely not going to get an offer as high as they would have at the end of 2021. This is why, we are starting to see for the first time in a couple of years, a significant amount of properties for sale lowering their original asking price.
Why did interest rates go up?
Mostly to combat untamed inflation. Needless to say, if we kept going on the same route as before, real estate housing market prices would have ended up even a lot higher than they already are. And also… you have to remember, that the higher the interest rate is, the more money banks/lenders make.
Will house prices drop as much as they did in 2008?
It is extremely unlikely that will happen. In 2008, the recession – Started with the housing market collapse. It wasn’t that the recession caused the housing market collapse, the housing market collapse caused the recession.
Today, this is not the case at all. And if you go into more depth, both cases are extremely different.
Most experts believe that the real estate housing market can and will even out. Instead of crashing as it did 15 years ago.
Real Estate housing market crash
A real estate housing market crash is very unlikely to happen. Especially (since I mentioned before). The causes of this current market situation, are considerably different from any other in the past. Where we have seen a real estate housing market crash.
Conclusion.
The real estate housing market has been scorching for a couple of years now and keeps increasing. However, a combination of different factors is starting to level the field a little bit.
It is expected by most professionals and experts to level out, and maybe even see a decrease in home prices soon.
The current real estate housing market, even though it may show some red flags and similarities to those from 2008. Most experts believe it is completely different. And we won’t be seeing that story unfold once again.
