Residential RE Update - Deceleration but not a Decline



The frenzied market that took off in mid-2020 is losing some of its steam, according to publications and sources (incl WSJ, National Association of Realtors and Realtor.com). Record-low mortgage-interest rates and home buyers’ desire for more space during the Covid-19 pandemic unleashed a sales boom that pushed prices to new highs.

I see the transition to a good balance as a path to sustainability without shock treatment. A soft landing is a favorable result coming away from the hot market. Check out my brief video commentary below.


Two years later, where do we stand? The national story has 4 components:

  • A cooling of the U.S. housing market.
  • Caused by rapidly rising mortgage rates and record home prices
  • Reflected in these 2 areas:

    • A downturn in home sales
      • Existing-home sales slipped 2.4% in April from the prior month, the National Association of Realtors
      • ‘‘Higher home prices and sharply higher mortgage rates have reduced buyer activity…We are moving back to prepandemic sales activity, says Lawrence Yun, NAR’s chief economist
    • A rise in active inventory

      • Active inventory is now growing, 11% above one year ago.
      • Still 50 percent below its level at the beginning of the pandemic.

      • According to Danielle Hale, chief economist of Realtor.com. “More inventory should eventually translate into a slower pace of sales and [slower] price gains.

    • And the grabber - A correction (but not in Nashville)
    An interesting Fortune magazine article states that home price growth and income growth are interwoven. Neither can outrun the other for very long. The problem is the trending gap during pandemic’s housing boom: Over the past year, home price growth (20.6%) is four times greater than income growth (4.8%). This leads to CoreLogic data and reporting that two-thirds of the nation's housing markets are "overvalued" and now face a test. 

    Click here for the Fortune magazine article (don't miss the cool interactive graphs) that puts Greater Nashville in the overvalued category…but (spoiler alert!) not one that is at risk for home price declines.



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