Sept. 1, 2022
The real estate market is shifting towards a more traditional movement.
Home price appreciation is still rising, but this uphill cost is somewhat slowing across the country under the weight of higher mortgage rates. You are now hearing there is a market shift. Typical property values are falling depending on the price point of the real estate property in question month-over-month in about a fifth of major metro areas in July 2022. If a seller overpriced their property from inception, and many have, these properties will either expire or lower slowly in their pricing. Keep in mind we are still experiencing a national housing shortage. We have been experiencing a high demand from Buyers with a low supply of housing from Sellers.
In June 2022, we saw inventory in Broward County increase 22.5 percent to 2,798 listings and supply of inventory rise 35.7 percent to 1.9 months. July 2022 statistics display the inventory in Broward County at 2.4 months with 3,313 listings.
Median home pricing in Broward County continued to increase in June 2022 at 18.4 percent to $590,000. In July the median home price increased to $600,000. However, it’s worth noting that closed sales were 1,440 in June 2022. The activity in July 2022 for closed sales is 1,680.
Nationally, typical home values rose a seasonally adjusted 0.7% last month from June, according to the Zillow Home Value Index data. That’s consistent with 8.5% home value appreciation on an annualized basis, a considerable downshift from a pace of around 25% in mid-2021. The Fed is coming in hard and fast on the 5% pace that was common in the five years before the pandemic, which would finally be consistent with its goal of bringing inflation back under control.
For the Federal Reserve policy makers to slow down inflation and restore affordability to the housing market, the tradeoff is raising interest rates. The federal reserve is scheduled to raise the interest rate again during its September 20 -21, 2022 meeting, and another increase is expected in December 2022. The limited amount of inventory we have been viewing is growing but not at an alarming rate.
Keep in mind, we are in South Florida where Real Estate is always moving…
Real Estate is moving. The homes that move the quickest are remodeled homes. Buyers are looking for stainless steel appliances, new flooring, remodeled kitchens and bathrooms. The pricing is also determining what is moving fast. Most properties which appear to be condominiums and townhomes under $400,000.00 are entering and leaving the market with numbers higher than the listing price in record time. The lower pricing on homes is in the $500,000.00’s range and they are receiving multiple offers. Why? Data suggests the median price on homes is now at $600,000.00.
If a home is above this price point of $600,000, the homes are taking longer to sell. The time to sell a home is no longer within a 2-week period. The interest rate changed this perception. The average time is increasing to 3 to 4 months. This does not mean the Seller is nervous. It means the Sellers know the market has changed and they are patiently waiting on the right buyer.
Housing was exceptionally strong as buyers enjoyed the 3% fantasy mortgage rate that had not been seen since the soldiers came back from World War II. We now see a more normal 5% to 6% mortgage rate. That difference is changing what can be purchased for certain home buyers. What was available at a 3% mortgage now is being downsized to fit the same budget.
Where are the foreclosures?
When the pandemic hit in 2020, many experts thought the housing market would crash. There was job loss and economic uncertainty with a virus that was not yet understood. Thankfully, the forbearance program changed that. It provided much-needed relief for homeowners so a foreclosure crisis wouldn’t happen again. Here’s why forbearance worked.
Forbearance enabled nearly five million homeowners to get back on their feet in a time when having the security and protection of a home was more important than ever. Those in need were able to work with their banks and lenders to stay in their homes rather than go into foreclosure. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), notes:
“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.” There is equity in homes today that did not exist when people were upside down in 2008. Right now, it is clear home foreclosures for 2022 are rising. The moratoriums and regulatory protections for foreclosures are over. Jacksonville and Lakeland made the top ten list of Florida cities for foreclosures. Time will tell!
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Susan J. Penn, PA South Florida Realtor ® 17 years
Luxury Real Estate Specialist
2645 Executive Park Dr #125
Weston FL 33331