Reports are now showing that the housing market is the craziest its been since 2006, pending home sales are declining – and now – the housing market could soon hit bottom as fewer homes are listed on the market for sale, at even higher asking prices – here’s what this means for you – enjoy! Add me on Instagram: GPStephan
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Here’s what happening today: CNBC now reports that – in June – new listings increased 5.5% year over year and 10.9% month over month compared with May…which means, there’s more inventory starting to come on the market for buyers to chose from, and that’s a sign of relief for the entire housing market.
However, EVEN THOUGH it’s an improvement…housing prices are still up 12.7% compared to a year ago. Inventory is still DOWN over 43% since June of last year…and nationally, the typically home is only the market for 37 days, compared with 72 days during the same time in 2020. And even though more inventory is coming on the market…listing prices are STILL going up, meaning that there’s no shortage of buyers out there – paying whatever they can to get a deal.
That’s led to record high housing prices, that even the CEO of JPMorgan recently said is “ a little bit of a bubble….BUT, the situation isn’t as severe as in 2008 when there was a lot more leverage and poor underwriting standards.”
Fundamentally, there’s nothing that’s happening that “THE MARKET IS GOING TO COME CRASHING DOWN” – so, for everyone who’s waiting for that to happen – it would need to take a BLACK SWAN event that no one could predict to collapse housing values.
Today, buyers are EXTREMELY qualified, they’re putting down a significant amount of money, they’re locking themselves in to historically low rates, and – most importantly – they can afford their payments. That would prevent us from seeing a “Wave Of Foreclosures” like some articles suggest.
However, there’s certainly some concern about mortgage forbearance potentially dropping TENS OF THOUSANDS of homes all on the market at the exact same time…but, here’s the reality:
The amount of homeowners claiming mortgage forbearance has been consistently declining month after month – suggesting that homeowners are resuming their payments, and moving on as normal. And for the homeowners who CAN’T make their payments – at the moment, they’re most likely able to list and sell their home for a profit – and then walk away with money in their pocket. For a home to go in foreclosure, the buyer has to owe MORE MONEY to the bank than what the home is worth – and, with record high home prices and record high homeowner equity – only 2% of all mortgaged properties fall in that category. That’s it. So, the chances of ALL of them foreclosing – all at the exact same time – just isn’t going to happen.
Instead, REALISTICALLY – I think the biggest risk to high home prices is increasing interest rates – which, we know is going to happen in the next 24 months. Next, decreasing building materials – which, again, is already starting to come down. Increased inventory – again, we’re now starting to see that. And increased building…which, is slowly starting to ramp back up.
Until then, we just need to keep an eye on inventory – housing prices could VERY WELL continue to trend higher if demand stays the same, but artificial factors like HIGH BUILDING MATERIALS will INEVITABLY come down over the next 12-24 months.
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