The housing market is on the cusp of an “inflection point” right now.
That at least, is the takeaway from multiple recent reports as well as conversations Inman had with industry economists. And it’s an inflection point that will impact prices, supply, demand and the lives of agents and consumers alike. It’s a big deal.
But there are two parts to this shift. First, the freewheeling bonanza of the past two years that was fueled, in part, by cheap money is ebbing, and the scales may tip at least slightly more toward buyers.
But second, and significantly, a shift is not a collapse. Though rising mortgage rates are cooling the market, the high rates of the 1980s and 1990s aren’t on their way back, nor is a collapse imminent thanks to the more modest hikes that are taking place. Rates, in other words, are the big driver of this story, but in the end shouldn’t become an Achilles’ heel for real estate going forward.
The shift is happening
The evidence of a shift has been mounting for months, but suddenly feels like it’s everywhere now. Just days ago, for instance, Fannie Mae reported that both homebuilding and home sales are headed for a slowdown.
Jeff Tucker, a senior economist at Zillow, made a similar point, noting that depending on location, the slowdown may already have arrived.
“I think the big story here is the housing market is at or very close to an inflection point where it’s about to start cooling down nationally,” he told Inman. “Given local variation there are parts of the country that have already passed that inflection point.”
Tucker went on to say that Zillow’s analysis indicates the rate of price appreciation nationally should peak and begin to decline “any month now,” with a plateau arriving by next spring — though he stressed that the further out the projection, the less certainty there is.
At the same time, Redfin Chief Economist Daryl Fairweather told Inman that “home price drops are climbing in the national data.”
“We’re starting to see a bit of relief when it comes to new listings,” she said.