Rapidly rising mortgage interest rates, record-high inflation, and now a recession are putting substantial pressure on would-be home buyers. With this said, home prices have still increased year-over-year. Of course, based on recent national headlines, you might believe that another housing collapse is on the horizon. As some examples, below are just a few of the recent headlines:
- “U.S. home prices are about to tumble as demand for new houses ‘craters,’ an economist warns.” (BusinessInsider)
- “Homebuilder confidence suffers near-record plunge” (Newsweek)
- “Scary times: builders are slashing home prices and slowing construction as buyers pull back, survey shows” (MarketWatch)
- “The housing market is entering the ‘most significant contraction in activity since 2006,’ says Freddie Mac economist” (Fortune)
Slower price growth
According to recent data from Black Knight, the yearly rate of price appreciation across the 50 largest metro markets throughout the country dropped from 19.3% to 17.3% as of June 2022. With this said, this level of price appreciation is still significantly higher than the historical average of 3% – 5% per year. In other words, at this rate, it will likely take another 6 months for the real estate market to return to historical level of home value appreciation. Of course, certain markets that saw the highest rise in home prices are now seeing the strongest deceleration.
With homes staying on the market for longer periods of time, we are also seeing inventory begin to improve. Although this improvement in inventory has been significant, we are still seeing inventories that are 54% lower than 2017 – 2019 (pre-pandemic) levels. At the national level, we currently have a shortage of more than 700,000 listings. At the current pace, it will likely take more than a year for this inventory to normalize.
These findings are certainly expected considering the tremendous headwinds being faced by the American consumer at the current time. As for the South Florida housing market particularly, we are seeing homes remaining on the market for longer periods of time with many of them reducing their prices slightly. Of course, with many companies adopting the remote working environment, we are still seeing strong demand from relocating Americans to our area.
Are you looking to buy or sell property in the South Florida area? Contact one of our Live South Florida Realty, Inc. team members today! Also, be sure to download our free Florida Home Search App for complete access to the South Florida MLS right on your mobile device!