Real Estate Rundown November 2022
November 03, 2022
As we round the corner into the final months of 2022, there are a couple of interesting housing market trends. Home prices are expected to fall due to the recent surge in mortgage rates, which have more than doubled from 3% about a year ago to well over 6% today. Home sale activity is at an all-time low as homeowners are apprehensive to list their homes for sale when demand is weak. With the surge in mortgage rates and high home prices, homeowners are motivated to relocate to more affordable areas. Where are people relocating?
As Mortgage Rates Continue to Soar, Housing Prices are Expected to Fall
While housing prices have been rising astronomically since the financial crisis of 2008, this upward trend is predicted to end as prices are set to fall (but not crash) throughout much of the country. This is mostly caused by the recent surge in mortgage rates which have more than doubled, rising from 3% a year ago to over 6% today.
As post-pandemic life returns to normal, many people who worked from home are now returning to the office, which also decreases housing demands and prices. Parts of the country like the Southeast and Mountain West that experienced the most growth in recent years are expected to suffer the biggest declines. Analysts agree that the nationwide housing shortage combined with the high mortgage rates will prevent a real crash in home prices.
Home Sale Activity at an All-Time Low
Homeowners who moved into more desirable areas when rates were lower are now locked into their current homes. According to World Property Journal, homeowners are apprehensive to make changes when demand is weak, giving up their low mortgage rates. Pending home sales and new listings show even bigger annual declines than during the summer months when sellers and buyers were initially shocked by the rapidly rising rates.
Additional indicators of home buying activity:
- Fewer people searching for “homes for sale” on google. Searches were down by 35% during the week of October 8th, reaching levels comparable to March 2020.
- Mortgage purchase applications were down by 2% week after week, and down by 39% from this time last year.
- Seasonally adjusted Redfin Homebuyer Demand Index was down 25% year after year, but up slightly from the previous four-week period.
Even Though Home Sale Activity is Slim, People are Still Relocating
Surging mortgage rates and high home prices are motivating many buyers to relocate to more affordable areas. People are more interested in migrating to different metro areas than during pre-pandemic times.
According to Redfins’ Refined Migration Analysis, folks who are still in the market to relocate are likely to prioritize living somewhere relatively affordable. Nearly 25% of homebuyers nationwide looked at relocating to different metro areas. The most popular spots for out of town homebuyers are Sacramento, Miami, Las Vegas, San Diego, and Tampa. Buyers are relocating to sunny, relatively affordable areas such as these.
Alternatively, migration trends show that hotspot metro areas like San Francisco, Chicago, and Seattle are facing an exodus.
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