![]() As prices soften, many will renew their interest, and we will continue our progress back to 'normal.' With buyers ready in the wings once confidence returns, homeowners can expect to keep the majority of the equity gains they've seen in the last two years."Īccording to Zillow's latest market report, home prices now stand at an average of $357,107. "This slowdown is about discouraged buyers pulling back after the affordability shock from higher rates. "Home values flattening so quickly after recent record growth might surprise, but it's a badly needed rebalancing that gives home buyers more options, more time to shop, and more negotiating power," said Zillow Chief Economist Skylar Olsen. A Zillow economist says that while the drop is surprising, it points to a much-needed rebalancing in the housing market.Īccording to Zillow, the nation's typical home value is up 16% year over year and 44.5% since July 2019, but the slight drop in July will give potential buyers time and options as the housing market rebalances. home value dipped 0.1% in July, the first monthly decline in a decade. housing market? Follow me on Twitter at story was originally featured on Fortune.The average U.S. If inventory spikes are any indication, those frothy markets could very well be headed for 2023 price corrections. Historically speaking, when a housing cycle "rolls over," it's normally the significantly "overvalued" housing markets that are at the highest risk of home price corrections. According to Moody's Analytics, Boise alone is "overvalued" by 72%. The Pandemic Housing Boom has pushed home prices in markets like Phoenix and Boise far beyond what local incomes would historically support. The second group includes frothy markets like Austin, Boise, Phoenix, and Las Vegas. Look no further than the mounting startup layoffs. ![]() Not only are their high-end real estate markets more rate sensitive, but so are their tech sectors. This grouping includes markets like San Jose, San Francisco, and Seattle. The regional housing markets getting hit the hardest by the slowdown fall into one of two groups. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and CoreLogic are also predicting a low-single-digit home price increase over the coming year. Fitch Ratings says home prices could fall 10% to 15% if the housing downturn worsens. Economist Robert Shiller, who predicted the 2008 housing crash, thinks home prices could decline 10%. Modest 2023 home price declines are also forecasted by Capital Economics, Zelman & Associates, and Zonda. John Burns Real Estate Consulting isn’t the only firm feeling a bit bearish. “That’s exactly what we’re all seeing right now.” ![]() “You could make a strong case that in a lot of housing markets the last 10% of home price appreciation was purely aspirational and irrational, and that’ll come off the top really fast,” Palacios says. He believes the home price drops suggest that some frothy markets, like Phoenix and Boise, have already seen their home price tops "blown off" and are on a path toward year-over-year price declines in 2023. Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune we should be looking at month-over-month shifts. Normally it's in bad taste to focus too much on month-over-month home price shifts. Instead, it views this as a housing market trying to find equilibrium amid a period of spiked mortgage rates. On multiple occasions this summer, Zillow has affirmed its view that we're in neither a housing bubble nor a housing crash. The current slowdown is prompted by the collision of extreme price growth during the early and mid-pandemic with the sudden increase in mortgage rates since December-a combination that swiftly weakened would-be homebuyers’ ability to afford or qualify to purchase their next house," writes Zillow chief economist Skylar Olsen. ![]() "While the recent decline in prices is a notable development, the housing market is still far from a return to normal conditions. That includes a 4.5% home price dip in San Jose. There's another reason that Zillow might be feeling a bit more bearish: Its analysis finds some regional housing markets saw home price declines in July.Īccording to Zillow, 30 of the nation's 50 largest housing markets saw month-over-month home price declines in July. At the same time, single-family housing starts have fallen 18.5% and mortgage purchase applications are down 18.4%. On a year-over-year basis, new home sales and existing home sales are now down 17.4% and 20.2%, respectively. The month saw the largest ever (dating back to 2016) uptick in total inventory on. Across the board, the housing market weakened in July.
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