With inflation hitting record highs in the U.S. and mortgage rates on the climb, we’re starting to see the housing market slow down a little bit. The article below from Forbes does a good job of analyzing what’s happening.
The author is quick to point out, however, that this slow down doesn’t mean that prices have dropped. We are still seeing housing costs move upward, bidding wars remain rampant and inventory is still low. Instead, the fever pitch of 2020 and 2021 has become somewhat muted in 2022 as more and more buyers are simply priced out of the market.
The rising mortgage rates were anticipated, and we saw signs of the market cooling down (sort of) last fall. The big question now is whether we’ll actually see prices drop, rather than just increase at a slower rate. As Forbes reports, that’s probably not in the cards anytime soon:
(I)ndustry insiders still don't think we're headed for a correction. Indeed, not a single major real estate firm is predicting that home prices will fall over the coming year.
For mobility teams with a corporate home sale program, the message remains pretty much the same: Prepare for the real estate market to remain hot with sellers in the driver’s seat (here are some tips for navigating this type of environment). However, the new wrinkle is that we’re at least seeing the early signs of a market correction (aka, prices drop and buyers get more leverage), so those in the real estate industry should be ready for that to eventually happen. It just might not be until 2023 or beyond.
For more on the state of the market, check out this recent conversation between Plus VP of Consulting Services Chris Pardo and our manager of real estate services, Kelly House.
Let's be clear: What we're seeing, as of now, appears to be slowing in the rate of growth—not a market correction. We're still amid one of the hottest stretches in recorded history for the U.S. housing market. Bidding wars are rampant. Inventory remains scant. And sellers have, well, pretty much all the power. The reason more homebuyers are suddenly pushing back at record home prices is pretty straightforward: Soaring mortgage rates are pricing many of them out of the market.