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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Aldi Opens In Covington Soon

Covington residents can see that construction has already begun on the new Aldi grocery store. It is planned that the store will open this winter. The new store will be located at 123 Holiday Boulevard in Covington.

This will be the second location on the north shore and the sixth location in Louisiana. The stores will be supported by a regional distribution center that opened in July in Loxley, Alabama.

Aldi is a German discount chain of grocery stores that are in the United States. The store began in Essen, Germany in 1961. The U.S. headquarters are in Illinois and there are 2,100 stores in 38 states. Most of the products sold at the store are private label which allows the prices to stay low.

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A Decline in Home Prices

September 2022 saw a dip in home values after a two-month 0.4% decline. Those in the industry say that the dip comes from a reaction to the drop in mortgage rates this summer. The future will also see a decline in the housing market due to the rise in mortgage rates since the summer.

The United States has seen declines as follows: Phoenix (-2.3%), Las Vegas (-1.9%), New Orleans (-1.0%), Riverside (-0.9%), and Austin (-0.9%). There has been a rise in prices in the following: Richmond (0.6%), Miami (0.6%), and Indianapolis (0.6%) markets. The greatest year-over-year was in Miami (25.7%), Orlando (23.4%), Tampa (23.2%) and Jacksonville (22.6%).

Fortunately, active listings have risen 3% from this time last year but they are still well below norms before the pandemic. This still is good for buyers as it means there are more options.

Even though there are fewer sales, pending listings dropped 29% compared to September 2021. This is due mostly to the rise in interest rates. Offers to accepted offers also went from 11 days in September 2021 to 19 days in September 2022. Many sellers began to cut the price of their homes to create a since of urgency.

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Questions For Your Real Estate Agent at an Open House

 Looking for a new home can be exciting and fun, but it is nice to have a real estate agent who can help you along the way. One of the most exciting parts is visiting open houses. Your real estate agent can be a big asset when it comes to open houses.

An agent knows the right questions to ask during an open house and can help stay informed. You can see the house and see where you stand as a potential buyer. They can also help you weigh the pros and cons of the open house.

When you walk into a home and everything looks great, you still need to do your due diligence. Ask about any testing that has been done or any potential issues that the home has or might have. If the home was built before 1978, an agent will know what to look for including mold, asbestos, radon, lead paint and soil. Other questions you might find helpful are what’s the flood zoning, how old is the roof, furnace and major appliances, what are the average utility costs, and have there been any major renovations to the home? An agent can help you decide if it is worth putting in an offer on a home depending on the answers to the above questions.

A home might have great curb appeal and be your dream home inside, but if it is in a bad area, that is not good. A listing agent may not have specifics on an area but they can direct you to websites that have the answers. Agents can tell you about nearby parks, restaurants, and shopping.

Remember choosing a real estate agent is one of the most important steps. An agent can help you with the important questions to ask when at an open house.

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Madisonville Gets a Grant For Park Improvements

 Madisonville officials announced that the city will receive a $350,000 federal grant that will go towards improvements to the town park.  Another $350,000 will also go towards the park from the Land and Water Conservation Fund grant.  The park is located between Pine and Main Streets which is located in the heart of Madisonville. 

The money will go toward new playground equipment and a splash pad for children. “This is great news,” Councilman Brad Haddox said.  “And it’s a long time coming,” added Councilman Keith Dennis.

The grant was originally applied for in 2021 so it has been a long time coming.  Improvements should begin within the next three months and the entire project is projected to take around a year to a year and a half.

Madisonville Park and Playground is in the middle of downtown and is a great area filled with swings, slides, and green space.  It is under huge oak trees that give plenty of shade.  The green space has a net for soccer and there are two lighted tennis courts along with a pavilion. The pavilion is a perfect gathering spot for large groups and is just a great spot to cool off in the shade.

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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...

New Home Construction Is Beginning To Pick Back Up

 Good news for the housing market, the new home building is starting to pick back up but builders are still frustrated. This fall we have seen an uptick in new home building even with the slower demand from new home buyers. Builder sentiment is still down though due to things like the high cost of building materials.

According to the US Census Bureau, August home starts for new home construction rose 12.2% from the previous month. This is still 1% down from August 2021 just a year ago. The home starts are still trying to catch up this fall from the big drop that was seen this spring. The housing starts have been holding steady up until about a month ago when they began to increase.

The increase is a plus for the housing market due to the low inventory that has disrupted the market for the past two years. The rise in home prices and bidding wars are part of the direct outcome of this shortage. ” The latest month’s increase is implying that builders still see profit opportunities even as they concede on prices,” said Lawrence Yun, chief economist at the National Association of Realtors.

Multi-family projects have seen the biggest gain which jumped 30% from July, single-family homes only rose 3.4% from a month ago. Even with these increases, builders are still shy about being too optimistic of what the future holds. Building permits dropped 10% from the beginning of the summer and were down 14.4% from the same time last year. Surveys are still showing that builder confidence is still falling.

This fall is partly to be blamed on higher mortgage rates, supply chain problems and high home prices. “Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households,” said Jerry Konter, NAHB Chairman.

The National Association of Home Builders reports show that builder sentiment has gone down every month since 2022 and shows no signs of rising anytime soon. “Builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped push mortgage rates above 6% last week, the highest level since 2008,” according to Robert Dietz, NAHB Chief Economist.

“In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buy downs, free amenities and price reductions,” said Dietz.

This is still not pushing home buyers back into the market. The study also shows that the cycle of homeowners moving up from a starter home is stalling due to the high prices and rising mortgage rates. First-time home buyers are also stalling and choosing to rent instead.

“Many potential ‘move-up’ buyers who would be likely candidates for high-priced new construction homes may also be weighing the benefits of remaining in their current home, where they likely have a mortgage rate less than half of today’s going rate – all factors that are contributing to a decline in housing mobility,’ said Kelly Mangold of RCLCO Real Estate Consulting.

The huge increase in multi-family buildings is due to the record high rents around the country. “Apartment demand has been strong, with rents rising at a historically high pace. Those consumers unable to qualify for a mortgage at higher interest rates are renewing their rental leases. Job creation is also boosting the rental demand,” stated Yun.

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