If you’re following the news, chances are you’ve seen or heard some headlines about the housing market that don’t give the full picture. The real estate market is shifting, and when that happens, it can be hard to separate fact from fiction. That’s where a trusted real estate professional comes in. They can help debunk the headlines so you can really understand today’s market and what it means for you.
In the recent Realtor Magazine, July 14, 2022, Melissa Dittmann Tracey writes,
"Most leading housing economists agree that the market isn’t in bubble territory. While home prices have never been higher, the market today is considerably different than in 2008 during the last housing crash.
For one, instead of a housing surplus, like there was in 2008, the nation is facing a severe inventory shortage. Homebuilders put more than 2 million housing units a year into the pipeline in the years leading up to the 2008 bubble and were overbuilding at the time, notes Lawrence Yun, chief economist for the National Association of REALTORS®. “Today, it is exactly the opposite,” he says. “The country is still facing historically low inventory levels and low rental vacancy rates that are the consequences of multiple years of underproduction.”
some markets overheated? Possibly. But economists put it into perspective: A 5% price correction in, say, places like Phoenix could be possible—but that comes after about a 50% price gain in just the last two years. “Even if there were to be a localized price correction, it will not cause harm to the [overall] housing market or to the financial banking system,” Yun says. “Some buyers will simply view it as a second-chance opportunity to get into the market after being outbid by others over the past two years, and the balance sheets of the banking industry are quite strong. So maybe prices would adjust downward—or maybe not. Let it be because it doesn’t really matter this time.”
Do you realize that owning real estate is a good hedge against inflation! Ever experienced rent increases? When you rent, you're really paying someone's mortgage, not your own. Therefore, renting does not offer the ability to build equity as it does when you are a homeowner. Fixed-rate mortgages protects you against price increases.
Our market correction does not necessarily mean it will crash! The last housing recession was about lending standards.
"Among the differences between today’s housing market and that of the 2008 housing crash is that lending standards are tighter due to lessons learned and new regulations enacted after the last crisis. Essentially, that means those approved for a mortgage nowadays are less likely to default than those who were approved in the pre-crisis lending period.” - Natalie Campisi, Advisor Staff for Forbes
Our nation is still suffering from a housing shortage that has reached crisis proportions at a time when many millennials are reaching the age when they start to consider homeownership. That’s likely to keep prices high.
Buyer demand remains high! We are still seeing high demand with little inventory, but that's changing. Why, because moderating demand is slowing the pace of home sales and that’s one of the reasons housing supply is finally able to grow. For you, that means you’ll have more options to choose from, so it shouldn’t be as difficult to find your next home as it has been recently.
And having more options may also lead to less intense bidding wars. Data from the Realtors Confidence Index from the National Association of Realtors (NAR) shows this trend has already begun. In their recent reports, bidding wars are easing month-over-month (see graph below):
- Dr. Sturtevant is currently the Chief Economist for the Virginia REALTORS© has provided this information in our Bright MLS - Mid-Atlantic housing market forecast for the second half of 2022 and 2023.
Mid-Atlantic
Typically a stable market with no wild swings either way, the Mid-Atlantic region is expected to see housing market conditions that mirror overall average U.S. trends in the second half of 2022. Home sales are projected to be 10.7% lower in Q3 2022 compared to Q3 2021. In the 4th quarter, sales are projected to be down 5.0% compared to the end of 2021. In 2023, seasonality will return to the market and the overall number of sales will be flat compared to 2022 (-0.3%).
Home prices will continue to rise at the regional level, with the median price forecasted to be up 6.6% in 2022 compared to 2021. Price growth will be slower in 2023, with year-over-year price appreciation at 2.1% for the Mid-Atlantic. Prior to the pandemic, home prices had been rising by about 3% annually in the region.
In Northern Virginia, we are seeing homes staying on the market longer and in July 2022, we saw around 40% of the listing getting price reductions.
Bright MLS shows this graph of the Counties in our Metro area which might be at risk for price reductions.
No matter what you’re hearing about the housing market, let’s connect. That way, you’ll have a knowledgeable authority on your side that knows the ins and outs of the market, including current trends, historical context, and so much more.
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