Unless you live a hermit life, you have to know that the housing market has been on a tear since the pandemic started. Median sales price in Los Angeles and Orange County went from roughly $700K to now $900K, an almost 30% increase. Who would have guessed?
COVID-19 was a disrupting force in the last two years. Came 2022, COVID-19 faded from the spotlight but came to War in Ukraine Inflation, More Uncertainties! In general, in times of uncertainty, people do not like to make major changes so the number of buyers on the market and the number of sellers on the market will both drop. We have more buyers on the market than sellers and that’s what caused the price to jump. The housing market needs more homes. I have some good news! According to US census data, we are seeing about 22% more new home construction than last year. Additionally, the number of single-family homes that completed construction was 12% higher than the month before. With the inventory problem beginning to improve, the sale of previously owned homes also fell in February, down 7.2% from last month and 2.4% from the year before according to the National Association of Realtors. According to Lawrence Yun, the chief economist for the National Association of Realtors, “The sharp Jump in the Mortgage rate and increasing inflation is taking a heavy toll on consumer’s savings.” He also said, “However, I expect the pace of price appreciation to slow as demand cools and supply improves somewhat due to more home construction”. So it does look like we are moving into a better balanced market. Another popular question I get is how will these social and economic impact relating to supply chain issues, inflation, and war in Ukraine will affect the housing market? Fortunenate for home buyers and sellers, according to Doug Ducane, Fannie Mae’s senior Vice President and chief economic says the housing market should weather those risks more easily than other markets because “Housing is current acting as support to an otherwise slowing economy although it is adding significantly to inflation.” Hope these information paints a better picture for you all and seems to align with what I have been saying. Market will slow, a more balanced market is coming and no housing market is not going to crash. Hope you enjoy this video.
