The housing market is facing a perfect storm that could prompt an overall economic downturn in the U.S.
National Association of Home Builders CEO Jerry Howard issued a stark warning on Friday saying the housing market faced a “perfect storm,” and that it could be a “bad sign” for the economy.
“Our own Wells Fargo NAHB Housing Market Index (HMI) declined three points this month because builders are saying things are going to ‘dry up.’ You’ve got a combination of the costs…regulatory compliance and now at the other end of the pipeline, interest rates are going up,” Howard said.
Housing: What happens now that home sales are shrinking?
Is it all bad news for the housing market?
The short answer is ‘no’. The real estate giant Zillow says that housing inventory will return to pre-pandemic levels.
The company’s Home Price Expectations Survey says inventory should return to around 1.5 million units or more by 2024.
However, that’s not great news for homebuyers looking to enter the market this year.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” said Zillow senior economist Jeff Tucker. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
Foreclosure: Housing market turbulent in 2022
What homebuyers will be best positioned in 2022-23?
Experts say that first-time homebuyers are going to have a big advantage. Even though it’s not difficult to sell homes today — extracting enough value to inherit a second, even larger mortgage will be a challenge.
First time homebuyers have a lot of advantages at their disposal. During the pandemic — the number of first-time homebuyers declined from 45% in 2019 to 37% in 2021.
Experts see that number increasing significantly over the next 2-3 years.
First time homebuyers will represent 45% of the market by the time 2026 comes around.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to [email protected]