Remember last year, even possibly the year before, when the most burning question on the minds of real estate consumers was whether or not there would be a burst housing market bubble?
At that time, the media and economists detailed the reasons why the market then was nothing like that of 2008.
So what are these economists saying now?
Recently, Lawrence Yun, chief economist at the National Association of Realtors, stated, “The recovery has not taken place, but the housing recession is over.”
During the NAR Forecast Summit on August 2nd, Lawrence presented slides to support this claim, including one demonstrating inflation’s steady decline in recent months.
He elaborated, “Homebuilders are beginning to see some recovery happening. They are back to pre-covid activity. Furthermore, their stock prices are rising, and they are making profits”.
Yun emphasized, “Ask any home buyers across the country what their biggest frustration is; it’s lack of choices and lack of inventory.” What a great quote to share with potential home sellers.
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Whether we’re in another correction or are heading toward a stabilized market remains to be seen. Knowing the economic signs that help signal the direction the market is headed can be empowering information to share with your market.
The number of home sales is but one metric
One of the early signs of a potential housing market correction is a significant decline in home sales. When the demand for housing weakens, and buyers hesitate to enter the market, especially across multiple regions, it suggests a broader trend signaling an impending market correction.
What do foreclosure rates tell us
A consistent decline in home prices, coupled with other factors, can signal a housing market correction. As you know, a prolonged period of declining home prices can erode homeowner equity, increase foreclosure rates, and dampen consumer confidence.
Thankfully, “After steadily declining for seven months in a row, housing prices have increased for the second straight month,” according to Ruben Caginalp at BankRate.com, citing the latest Case-Shiller U.S. National Home Price NSA Index.
According to NAR, the median existing-home sale recently hit $410,200, which is the second-highest price ever recorded.
Attom Data Solutions reported “… a total of 95,712 U.S. properties with foreclosure filings during the first quarter of 2023, up 6 percent from the previous quarter,” according to their most recent Foreclosure Activity Report.
While those numbers pique our interest, they remain well below what we experienced during the 2008 housing market crash.
Pay attention to jobs numbers
The U.S. Bureau of Labor Statistics releases its jobs report once a month. You can find the calendar online at BLS.gov. It’s important to keep an eye on what’s happening with employment.
The overall health of the economy is intertwined with the housing market. During an economic downturn, job losses and rising unemployment rates can significantly impact the housing sector.
The stability and performance of the housing market have a profound impact on professionals who work in the industry, consumers, and the overall economy.
Given its significance, the question of whether there will be a housing market correction this year demands continued observance so you can counsel your market and keep any overinflated fears at bay.
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