TheMReport

MReport December 2022

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link: http://digital.themreport.com/i/1488302

Contents of this Issue

Navigation

Page 57 of 67

56 | 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 Survey: Housing Market Collapse Imminent? A majority of Americans fear rising mortgage rates and a lack of affordable housing could spark a market crash that could equal the 2008 downturn. L endingTree's latest survey found that 41% of consum- ers are concerned about a housing crash over the next year. Of those who believe a housing market crash is imminent, 74% of those believe the next downturn will be as bad or worse than the 2008 housing market collapse. At 44%, millennials were most concerned over a potential hous- ing crash. This is followed by Gen Xers at 43% with baby boomers being the least concerned at 35%. Thirty-three percent believe in- flation will be the biggest reason for a potential crash, 24% say high interest rates, and 16% believe the cause will be the lack of affordable housing. Mortgage rates continue to be a con- cern for Americans, as 58% say this is a cause for concern moving forward. Additionally, 55% of Americans con- cerned over rising rates said they'll rise for another six to 18 months. Twenty- three percent said it could take two years before rates stop increasing. "While I do think the hous- ing market will continue to slow over the next 12 months and some people may end up underwater on their mortgages as a result, a major crash doesn't appear likely—at least not at the moment," LendingTree Senior Economist Jacob Channel said. "With that said, I do think that home prices will probably come down next year. As of now, 5% to 10% declines in many markets seem reasonable to me." While many fear a housing crash is near, 25% of Americans do not believe a crash will hap- pen next year. However, 22% of those respondents said the crash wouldn't come "that soon." They instead believe a housing market collapse could occur in the next two or three years. Homeowners and prospective homeowners received some good news regarding mortgage rates recently, as Freddie Mac reported the third-consecutive decline on December 1. The average 30-year fixed-rate mortgage came in at 6.49%—down from the prior week's rate of 6.58%. Last year at this time, the 30- year fixed-rate mortgage was 3.11%. "Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes," said Sam Khater, Freddie Mac's Chief Economist. "Even as rates decrease and house prices soften, economic uncertainty continues to limit homebuyer demand as we enter the last month of the year." Record Amount of Sellers Delisting Homes Redfin is reporting that a record number of sellers are taking their properties off the market. R edfin has found that a record 2% of homes for sale every week are being delisted from the market for a litany of reasons and this number may continue to increase into next year. According to Redfin, sellers are taking their homes off the market because of the low-quality offers they are receiving—or no offers at all—due to a sharp drop in buyer demand caused by high home pric- es and high mortgage rates. While mortgage rates have dipped slightly since mid-November, the monthly mortgage payment on the median- asking-price home is still 40% higher than it was one year ago. "Some sellers are having a hard time grasping that we're not in a housing-market frenzy anymore— it's tough for them to swallow that they missed the boat on getting a high price," said Heather Kruayai, a Redfin real estate agent in Jacksonville, Florida. "By the time sellers realize their listing was priced too high, it has already been on the market for too long and is considered stale. I recently had two sellers take their homes off the market after 45-plus days." It should be no surprise that pandemic-era boomtowns are seeing the biggest jump in del- istings: Sacramento, California, reported that 3.6% of active listings were delisted in the 12-week period ending November 27, up 1.6 percentage points from the same period a year prior. This was followed by Austin, Texas, Seattle, Phoenix, and Denver. In Austin, for example, the median home-sale price was up a record 43.5% year over year in the spring of 2021, but growth had shrunk to just 3.7% as of October 2022. And in Sacramento, there was 0% annual home-price growth in October, compared with as much as 29.3% last spring. "I've had many sellers cancel listings," said David Palmer, a Redfin real estate agent in Seattle. "Usually, sellers who pull their listings off the market in the fall do it with the intention of listing again in the spring. But with the word 'recession' out there, there's not as much optimism about spring being a better market. Now people are talking about trying again in another year or two once the economy improves." Sacramento not only saw the biggest year-over-year jump in delistings; it also had the high- est overall share, with 3.6% of for-sale homes delisted per week on average during the 12 weeks ending Nov. 27. It was followed by San Francisco (3.4%); Oakland, California (3.3%); Seattle (3.2%); and San Jose, California (3%). Pittsburgh had the lowest share of delistings, at 1.3%, followed by Cincinnati, at 1.4%. Rounding out the bottom five are New Brunswick (1.5%); Newark (1.6%); and Virginia Beach, Virginia (1.6%).

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport December 2022