Decoding Deceleration
Recent news articles on Fortune.com have centered around the decline in housing prices. Economists agree that housing prices will continue to decline in particular regions over the next 12 months. However, it’s essential to distinguish between a “price correction” and “deceleration.” What we are seeing is a deceleration. Deceleration means prices are rising at a more modest rate. It does not mean home values are dropping. Everything is still on an upward trajectory, just not as fast as we have seen over the past year.
The U.S. housing market has slowed down slightly due to increased mortgage rates. Mortgage applications are showing a decline, and fewer listings are getting multiple offers as a result. These factors are causing housing inventory levels to rise, which can be considered good news in several markets.
Moody’s Analytics chief economist Mark Zandi calls this a “trajectory flip.” Meaning that demand is pulling back in the face of higher mortgage rates, but the housing market remains steady. Prices may be going down, but not at an alarming rate, which means home valuations remain healthy.
The memories of the 2008 crash are still painful. However, Zandi says this market shift’s circumstances are different from the 2008 housing crisis. While the spike in mortgage rates has priced some folks out of the market, most homeowners are financially better off than they were leading up to the 2008 debacle. This shift is at the hands of the Federal Reserve rather than banks. Meaning that if nationwide home prices do begin to plummet, the Fed has the ability to ease up on mortgage rates and correct the dive.
Deceleration is not a bad word. Our market is not going down. The market needs to cool so that inventory can stabilize. Multiple offers and bidding wars are not normal market conditions. Buyers and sellers need a team with the wisdom and experience to navigate any market under any circumstance!
We are here for you, and we know what it takes to protect you in any market. If you would like to talk more about the changing market and what it means for you, we’re happy to help. Contact the David Morris Group or call us at (775) 828-3292, and we’ll guide you every step of the way.
