Are you waiting for house prices to go lower?
If you are waiting for house prices to go lower, it might be a long wait. Because the housing market and interest rates have been in flux this past year, you may be wondering where it’ll go from here.
There are two factors you may be considering in this equation. One is home prices, which have come down a bit since they peaked last June. And many in the news or on social media are talking about a price crash coming. So you may be holding off on buying a home until prices drop significantly. But that may not be the best strategy.
A recent survey from Zonda shows 53% of millennials are still renting right now because they’re waiting for home prices to come down.
“Experts” are all over the map with their predictions. In December 2022 the reports were that the predictions were house prices would continue to fall. https://www.businessinsider.com/housing-outlook-this-is-how-far-us-home-prices-could-fall-and-when-2022-11.
Another website https://www.noradarealestate.com/blog/housing-market-predictions/ believes that according to Fannie Mae the housing market will continue to struggle. But wait there are more opinions on this topic.
While housing prices may have fallen in other areas of the country, Texas has fared well and this particular area has actually increased. Days on market has increased but is still fairly low. Days on Market (DOM) is a rating that many watch for various reasons but the condition that determines what is a a seller market vs a buyers market is the absorption rate. Absorption rate is the calculation that if no new listings were to come on market how many months would it take to sell all that is currently on market. Six months is considered a balanced market. Below 6 months is a sellers market and above 6 months is a buyers market. So based upon our area chart below you can see how those numbers have been faring. It also indicates that prices have been rising.
But the most recent data shows that home prices appear to have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, reports:
“U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”
And the latest data from Black Knight shows the same shift. The information below compares home price trends in November to those in February:
The above is stating that since November of 2022 that Home Prices are up in the majority of the country, they have not gone lower.
In November of 2022 96% of home prices had declined; 4% had increased. In February of 2023 only 22% had declined, 78% had increased.
One of the other factors in the Black Knight article is that serious delinquencies have continued to improve nationally falling by 17,000 with 45 of the state seeing delinquency volumes fall in February. Foreclosure actions began on 5.1% of the serious delinquencies in February but overall delinquencies of over 90 days past due has continued to decline. There was an uptick in the delinquency rates of 2% in the early stage delinquencies. It remains to be seen if this uptick will continue.
The Black Knight has the charts of the National Delinquency figures from Aug of 2019 to Mar 2, 2023 in the above article.
Mortgage rates edged lower in late March due to banking sector concerns. While is it down compared to early March it is still higher than the February average. So if the interest continues to increase, that factor will may play a factor in sales which can affect prices. That may cause lower prices as there will not be as many buyers shopping.
At this time, because there has been a modest increase in prices and the interest rates that has led to a worse affordability levels than last year.
So, should you keep waiting to buy a home until prices go lower? If you factor in what the experts are saying, you probably shouldn’t wait based on the Black Knight report. The data shows prices are increasing in much of the country, not decreasing. And the latest data from the Home Price Expectation Survey indicates that experts project home prices will rise steadily and return to more normal levels of appreciation after 2023. One of the reasons for this factor is that because as the interest rate increases many people are remaining in their homes which have the lower interest rates causing a lack of inventory. A lack of inventory leads to higher prices as buyers chase the lower levels of inventory.
Another expert view on this is https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/. It is an article discussing if prices are becoming more affordable.
So if you have followed all the links there is a variety of opinions. But what is the most important is where you are in your life’s journey and what you need or want. The best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice. We can make sure you understand what’s happening in this local housing market. It is true that like you have always heard real estate is based upon location, location, location.
And in our local real estate market, the home prices are not lowering on average at this time. While there are price decreases in our market the overall market average is not down.
Floresville Real Estate Agent – Faye Y Taylor Realtor® is here for help and to answer any questions you might have
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