Are you considering entering the housing market, or perhaps just curious about the state of real estate? In this blog post, we'll delve into the current status of the housing market, explore the reasons behind its dynamics, and provide some insights for future forecasts. Buckle up, as we take you on a journey through the evolving world of real estate.
Over the past few years, the US housing market has been nothing short of a rollercoaster ride. Prices skyrocketed in 2021 and 2022, bidding wars were the norm, and it seemed like homebuyers had to act in a flash. But now, there's a noticeable shift in the winds—a cooling of the market.
Home prices and sales have slowed considerably, but property in Southern Utah is always in demand. For the first time in a while, I saw a price increase in a home listing. Could this be a sign of a shift in the market? Zillow's forecast suggests a 6.5% increase in US home prices from July 2023 to July 2024, a figure slightly higher than their previous prediction of 6.3%. It doesn't seem like that is what we are seeing in the market right now. And Zillow, like anything else, is speculation at this point.
The inventory levels in Southern Utah are what make me lean towards a market that could shift anytime. It is a common consensus that the number of homes in Southern Utah listed for sale has always been less than adequate. Now we see from June 2022 to June 2023, a listing decrease in homes by more than 30%. Less choice can equate to more competition, and more competition could lead to price increases.
One of the biggest things holding the market back right now is the rising cost of everything from gas to groceries, compounded by the fact that even though home prices have come down, interest rates have doubled in recent years! This is shown in the number of people looking for houses. There has been a noticeable drop in home-seeking activity. Fewer people are applying for mortgages, and the number of real estate showings has decreased by 32.2% compared to the previous year.
Zillow's economists are also predicting a continued "persistence of elevated mortgage rates." Right now, the average rate for a 15-year fixed-rate loan reached 6.75%, while 30-year loans surged to 7.49%. These rates are significantly higher than previous years but surprisingly have not yet deterred buyers completely. Homes are still selling.
I tend to be a bit of an optimist in what I do, and I stand behind a bright outlook for the market and future home buyers. Despite all of these changes, it's important to note that the housing market is not on the brink of collapse. Unlike the foreclosure crisis of the past, current foreclosure activity remains low. Most homeowners have a comfortable equity cushion in their homes, and lenders have avoided filing default notices, leading to record-low foreclosure rates in 2020.
Experts hold varying opinions on the market's future, but Zillow's forecast remains bullish. As mentioned, even with the "persistence of elevated mortgage rates," they predict a 6.5% increase in US home prices from July 2023 to July 2024, emphasizing the role of the severe housing shortage in driving prices higher.
In conclusion, while the US housing market is indeed cooling, it's important to recognize that this shift presents opportunities for both buyers and sellers. With the right strategies and a clear understanding of market dynamics, you can make the most of this evolving real estate landscape. Continue to stay informed and work with trusted professionals to achieve your housing goals.
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