MReport September 2022

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58 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Summer 2022: Top Emerging Housing Markets With inflation at a 41-year high, mortgage rates at levels not seen in over a decade, and both home prices and rents at record highs, many Americans are feeling rising financial strains this summer, which continue to ripple throughout the housing market. N ew data from Realtor. com and the Wall Street Journal revealed the economy and housing markets are moving through a tran- sition toward a new normal this summer, as consumers maintained an active pace of retail spending— even with surging inflation—as a strong labor market maintained upward movement on wages. The pressure of rising prices is a prevailing headwind this year, felt by the majority of Americans across the country. The Federal Reserve acknowledged the threat that rising prices pose to consum- er spending and economic growth and has been actively engaged in hiking borrowing costs in order to cool consumer demand. After missing early signals in 2021 by calling inflation "transitory," the central bank has accelerated its monetary tightening, with a 75-basis-point increase at its last meeting —indicating that it will take more aggressive measures in the months ahead. The economy continues to also feel the impact of global sup- ply chain disruptions due to the ongoing Russian war in Ukraine. The international community maintains a raft of economic sanctions in response to Russia's aggression. With inflation at a 41-year high, mortgage rates at levels not seen in over a decade, and both home prices and rents at record highs, Americans are feeling rising financial strains this summer, which are reverberating through housing markets. Regarding demand, rising mort- gage rates pushed the monthly payment for a median-priced home to $2,000 in June 2022 from $1,300 a year ago, leading to a no- ticeable drop-off. Buyers who may have started looking for a home three or four months ago are finding that by the time they find the right home, their budgets may no longer be sufficient enough to buy it. On the supply side, more homeowners are listing their properties for sale, ready to move forward with pandemic-delayed plans and also take advantage of high prices. With declin- ing competition among buyers, many homes for sale are lingering longer on the market, leading to a growing share of price reduc- tions. In June, the share of homes on seeing price cuts rose to 15% of listings, more than doubling last year's 7% during the same month. With the feverish pace of the 2021 market behind, markets are moving toward more balance, and in line with historical trends. Unfortunately, there are not enough homes for all the people who need them, following over a decade of underbuilding. Within a dynamically chang- ing landscape, the summer 2022 index reveals a growing path to affordability. The top of the list is populated with housing markets displaying solid economic fun- damentals, in-demand amenities, and lifestyle options, along with a critical dose of affordable homes. The index also identifies markets that experts believe are good areas in which to purchase a home for homeowners and investors alike, with expectations of price ap- preciation complementing vibrant and diverse communities. Affordability and High Quality of Life Lead Summer Housing All of the top 20 markets in the index fall into one of two categories: affordable or outdoorsy. Twelve of the markets had a median home listing price near or below the national median during Q2 of 2022, led by Topeka, Kansas, and Jefferson City, Missouri, where the median listing prices were just over $200,000. While many of these markets have flown under the national ra- dar, the secret about their afford- able qualities has garnered much attention. The average year-over- year growth rate for the median listing price among these 12 mar- kets is 21.6%, compared to 16.2% nationwide—a sign that buyers are still active. On the other end of the spectrum are the 8 markets on the coast or in the mountains like Santa Cruz-Watsonville, California, and Boulder, Colorado, with median listing prices over $1,300,000 and $850,000. By definition, all of our top markets are hot markets and price growth is sure to follow. Our featured markets are at dif- ferent pricing stages, though. In the number one market, Elkhart- Goshen, Indiana, price growth reached a staggering 49.4% in the second quarter of 2022 as the market was the subject of highly focused demand. Elizabethtown- Fort Knox, Kentucky, on the other hand, just broke into the top 20, and its 3.4% listing price growth rate is the lowest of the markets on the top 20 list. The average time on market for the top 20 is 22.6 days, compared to 32.3 nationwide. In fact, all featured markets except Eureka- Arcata-Fortuna, California, see listings spend fewer days on market than the national median. The three North Carolina markets are among the metros with the shortest transaction times. Raleigh, North Carolina (11 days), Burlington, North Carolina (15 days), and Durham-Chapel Hill, North Carolina (17 days), have all seen a blistering pace of sales during Q2 of this year, as buyers chased after the relatively low cost of living in the state. Within a dynamically changing landscape, the summer 2022 index reveals a growing path to affordability.

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