Home Prices in Q3
Indicate a Possible Market Cool Down
Incentivized by several factors, such as the record-low interest rates, increased work-from-home opportunities, and the uncertainty caused by the pandemic pushing people to settle down, the market was flooded with new buyers, drying up even the existing inventory. Last year, the Federal Reserve took steps to keep the financial market liquid by ensuring mortgage rates remained low in 2020 and 2021. Coupled with the supply and demand dynamic, price appreciation went through the roof in double-digits. According to a CoreLogic report, home prices nationally, considering distressed sales, grew by 17.2 percent in June 2021 compared with June 2020. But with vaccination levels up and the economy in recovery, are home prices dropping? If they are, what does that mean for homebuyers? 18 l
PRICE DECELERATION HAS BEGUN It does not call for a celebration yet, but the tables are turning. For most 0f 2020 and 2021, the housing market has been primarily a seller’s market—with sellers having the upper hand. A market that saw the demand outweigh the supply, leading to bidding wars that resulted in homes selling well above the asking price. Price deceleration in some parts of the country has begun as more inventory has become available to mark the shift. The rate of price decoration is not uniform, with some areas experiencing it at a faster rate than others. In Boise and Idaho, where home prices went up by 30 percent in the past year, asking house prices are being slashed, with bidders no longer having to waive inspections to entice sellers.
”You’re seeing the fear of missing out switching from buyers to sellers,” Dominic Zimmer, a realtor, told Bloomberg. ”Now sellers are afraid of not scoring the way their neighbors did a year ago.” In metro-cities such as Phoenix, San Diego, Tampa and Florida, they experienced the highest year-over-year gains among 20 cities in August. With Phoenix taking the prize with a 33.3 percent year-over-year price increase, followed by San Diego with 26.2 percent and Tampa with a 25.9 percent increase. While that data is indicative of a strong market, cracks are forming, and experts predict that prices will continue to decrease. ”We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction THE POWER IS NOW MAGAZINE | DECEMBER 2021
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s much as we would like to think that home prices began to rise during the pandemic, that is not the case. Pre-pandemic, the demand for homes was already very high, with the supply struggling to keep up for years. When the pandemic hit in 2020, the demand quadrupled, the housing supply shrinking even further.
