Prices falling in expensive cities
Home prices in 18 of the largest 50 cities in the U.S. fell between the four-week period ending Jan. 15 compared to the same period time a year before, says a new report from Redfin.
In San Francisco, prices fell 10.1% year-over-year. Other cities experiencing price drops are San Jose, Austin, Detroit and Phoenix.
According to the NAR, we may see expensive markets fall further, which if that happens sooner than later, would make it an excellent time to buy into an expensive market.
“Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year,” noted NAR chief economist Lawrence Yun in a release.
It’s difficult to know for sure if this will happen. The only way to know for sure is to wait.
Meanwhile, keep in mind that — as with any investment — it’s best time to buy is usually when prices are low.
Stop overpaying for home insurance
Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.
SmartFinancial can help you do just that. SmartFinancial’s online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.
Explore better rates
Homeowners aren't in dire straits
The onset of the pandemic could have been catastrophic for the housing market if millions of homeowners had no choice but to default on their loans.
Fortunately, mortgage forbearance programs allowed struggling borrowers to pause their payments until they could get back on their feet. And it worked: by March 2021, the share of mortgage balances 90-plus days past due sank to 0.5%. As of Q2 2023, the share sits at 0.46%. That’s a far cry from the 11.36% rate in 2010, when Americans were struggling to make payments.
Delinquencies on single-family homes hit a 30-year high of 11.36% in 2010. In comparison, the rate was just 1.72% for the second quarter of 2023.
On top of that, rising home prices has translated into increased equity for homeowners.
Although home prices have started to decline, by the end of November 2022, mortgage holders held nearly $11.5 trillion in tappable equity — with home values in the country’s largest 50 markets still up 19% to 66% compared to the start of the pandemic, according to Black Knight, a mortgage technology and data provider.
Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
2008 had oversupply, but here we have low supply
For those who fear a repeat of the 2008 financial crisis that rocked American banks, take heart. Even the economic perils of the pandemic left many homeowners relatively unscathed.
Should home prices increase in much of the U.S., homeowners will enjoy more equity, which will put them in a better financial situation, as noted in the Harvard Business Review.
Compare that to 2008, when the housing crash and oversupply killed home prices — and led at least one Detroit homeowner to sell for just $1.
“High mortgage rates approaching 7% have significantly weakened demand,” said NAHB chairman Jerry Konter last year. “This situation is unhealthy and unsustainable.”
And it’s why 2023 might be the lowest prices you see for some time.
So does that mean moving would be the best move? Between housing prices and mortgage rates, let’s see how the economy moves first.
Sponsored
Follow These Steps if you Want to Retire Early
Secure your financial future with a tailored plan to maximize investments, navigate taxes, and retire comfortably.
Zoe Financial is an online platform that can match you with a network of vetted fiduciary advisors who are evaluated based on their credentials, education, experience, and pricing. The best part? - there is no fee to find an advisor.
-1692125006-1695153507.jpg)
