Last Updated on June 1, 2023 by Luke Feldbrugge
Welcome to the Housing Market Trends June 2023, where we provide valuable insights into the real estate market. We’ll discuss recent updates on prices, inventory, foreclosures, and the Federal Reserve’s discussions on a potential recession. Our aim is to equip you with the information you need to make good decisions in the upcoming year, whether buying, selling or refinancing.
Housing Market Trends June 2023 Topics
- Home Prices
- Inventory and Foreclosures
- Possible Recession?
- Foundational Strength of Real Estate Industry
To begin, let’s examine the latest news on national home prices. In the first quarter of 2023, home prices rose by 1% on a quarterly basis, indicating a significant demand for mortgages despite ongoing affordability challenges. This slight increase in the average sales price for single-family homes is a positive development and suggests that the decline of home values may have stabilized. Looking at leading indicators like Case-Shiller, FHFA, and CoreLogic, we observe a trend of stabilizing or slightly increasing house prices since the previous year.
While there have been concerns about potential list price declines, the data does not support a significant price drops in home prices. In fact, recent reports show that prices are rising in the majority of markets, which is encouraging news for home sellers and home buyers.
“Just five months ago, prices were declining on a seasonally adjusted month-over month basis in 92% of all major United States markets. Fast forward to March, and the situation has done a literal 180, with prices now rising in 92% of markets from February.” – Andy Walden, VP of Enterprise Research, Black Knight
Low Inventory and Foreclosures
Turning our attention to inventory and foreclosures, it’s important to note that the current market is characterized by a low supply of homes. This shortage in the number of homes has contributed to strong demand and the ongoing seller’s market conditions, where well-priced properties are selling quickly due to high demand.
Despite some reports suggesting a surge in foreclosures, it is crucial to interpret the data accurately. While foreclosure activity has increased slightly in recent years, it is not at a level that would dramatically impact inventory or shift the market to a buyer’s market. Misleading headlines about a housing bubble can cause unnecessary panic, so it’s essential to have a clear understanding of the facts (and have the expertise of real estate agents).
“There’s no reason to panic, at least not yet. Foreclosure filings began ticking up in late 2021, after the federal foreclosure moratorium ended. The moratorium was enacted in the early days of COVID-19, when millions of Americans lost their jobs, to prevent a tsunami of homeowners losing their properties.” – Clare Trapasso, Executive News Editor, Realtor.com
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Housing Market Trends June 2023: Possible Recession?
Moving on to the topic of a potential recession, there has been speculation surrounding the Federal Reserve’s actions and the likelihood of an economic downturn. While we won’t make specific predictions, it is important to acknowledge that discussions about a recession are intensifying. The Federal Reserve has indicated a possibility of a mild recession starting in the early summer of this year, followed by a recovery over the subsequent two years. It’s important to remember that they predicted a mild recession beginning in Spring of 2023, which never happened.
However, it’s crucial to note that a recession does not necessarily lead to falling home prices. Historical data from previous recessions shows that home prices have appreciated in most cases. Additionally, during a recession, the Federal Reserve typically lowers interest rates, creating incentives for spending and making mortgages more affordable, especially for first-time homebuyers. This can result in increased good news for potential buyers.
It’s vital to be well-informed about the pros and cons of buying during a recession and to address clients’ concerns. While a recession may offer advantages such as less competition, lower prices, and lower rates, there may also be challenges like stricter lending requirements and economic uncertainty.
Foundational Strength of Current Real Estate Market
Lastly, it’s important to recognize the strength of the housing market’s foundation. The majority of existing mortgages have an average rate below 5%, and many homeowners have significant equity in their homes.
This robust foundation, combined with the fact that most Americans have paid off their mortgage loan or hold substantial equity, contributes to the overall stability of the housing market. That’s why it’s a good idea to remember that stability if you see headlines predicting a real estate crisis or market reports that suggest we should all panic. This isn’t 2008.
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