The Market Is Seeing a Decline in Home Prices

 For two years we have seen a boom in the housing market when it comes to price appreciation. We have finally seen the peak, as the prices are now declining.

Prices will keep declining in the near future but will not drop as far as they did during the recession. From the peak in 2006 all the way through to 2012 there was a 27% decrease in home prices.

“It was different in 2008, 2009 because that drop in prices was because of a push from sellers,” said Jeff Tucker, senior economist at Zillow. “Because of foreclosures and short sales there were a lot of extremely motivated sellers who were willing to take a loss on their homes.”

“I would be surprised to see prices anywhere drop below where they were in 2019,” said Tucker. “There was some overheating in the housing market in 2021 through this spring that pushed prices higher than what the fundamentals would support. Now they are coming down.”

With the soaring mortgage rates along with elevated home prices and slow increases in wages, home buying is not in most potential buyers’ future. According to Goldman Sachs we should see a decline of around 5% to 10% from the peak, Wells Fargo predicts a 5.5% decrease. This means the median home price will fall to $364,000.

“The primary driver behind the housing market correction thus far has been sharply higher mortgage rates,” the Wells Fargo researchers wrote. “If our forecast for Fed rate cuts is realized, mortgage rates are likely to fall slightly just as cooling inflation pressures boost real income growth. A modest improvement in sales activity should then follow, which will reignite home price appreciation heading into 2024.”

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New Home Sales Are Bouncing Back This Fall

New Home Sales Are Bouncing Back This Fall  1

 Even with the rising home prices and mortgage rates, new home sales have bounced back.  The US Department of Housing and Urban Development along with the US Census Bureau reports that the sales of newly constructed homes have risen 28.8% from this summer.  It was reported that 685,000 new homes were sold in August 2022 which was up from July’s report of 532,000 and down slightly from a year ago with 686,000 newly constructed homes.

The median home price for a new home did slip to $436,800 from $439,400 the previous month.  Prospective buyers are not happy with the huge stretch in their budget, the long construction wait times and the rising mortgage rates.  The average interest rate for a 30-year fixed rate did dip just below 5% in August but is still high compared to the 3.22% we saw in January.

“New homes blew through estimates for August, but it’s likely an aberration caused by a dip in mortgage rates earlier in the summer. The good news is price increases for new homes continue to cool which points to a more reasonably-priced housing market starting as soon as next year,” said Robert Frick, corporate economist at Navy Federal Credit Union.

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Post settings Labels home prices, prices, price, Urban, US Census, houses Published on 10/29/22 8:00 PM Permalink Location Options Creating new post...

Reasons to Buy a Home

From a survey conducted every 2 years by the National Association of Homes Builders (NAHB), builders and Realtors can learn and understand what the “average home buyer” wants in the home that they are buying.  This survey is very important in detailing a buyer’s reasons to buy a home.   From a broad perspective, the survey indicated that over 55% of home buyers would prefer to buy a new home vs. a pre-existing home, but the actual percentage of home buyers buying new homes was only 11% from 2011 – 2013.  However ,this 11% was actually a 3% increase from 2008 when only 8% of home buyer bought a new home.

Size, floorplan, price and neighborhood scored in the top 70th percentile as reasons to buy a home by home buyers surveyed by the NAHB with the aesthetics and safety playing an important role in the decision to buy in a certain neighborhood.  In St. Tammany Parish, Bedico Creek Preserve offers a master planned community in Madisonville that scores highly on not only beautiful homes and an almost completely safe neighborhood location, but also, with 10 Neighborhoods within the subdivision from which to choose, new home buyers also get to enjoy lots of variety in choosing not only a house to buy but also a lot location on which to build a new, custom home, if desired.

The NAHB also said that good schools tended to be important to new home buyers especially.  Madisonville, Louisiana, boasts the best school district in St. Tammany Parish which already scores as one of the best school districts in the state.  Many home buyers’ reasons to buy a home in Bedico Creek is because of its excellent school district.

Another important factor found in the survey was that buyers of new homes valued quality construction especially when using a builder to build them a new home.  The construction, durability, and beauty of the home was extremely important to them.  In Bedico Creek, we have 14 new home builders that are available for a consultation on either building a new home on a lot purchased in our community or buying a new home built by our quality builders in St. Tammany Parish.

According the National Association of Home Builders,  Bedico Creek Preserve scores highly across the board for all of the features that are important to new home buyers which is probably why the homes and lots in our new subdivision are selling out so quickly.  Don’t miss your opportunity to own a new home in the fastest growing master planned community in St. Tammany Parish!  Contact Us at 985-845-4200 or E-mail Info@LiveBedico.com.

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