State of the Housing Market
-Unpacking the Unstoppable US Housing Market- Mark Taylor, Senior Licensed Loan Officer, NMLS: 1504731
If you're waiting for a housing correction in the US market or for interest rates to fall, you might want to reconsider. Based on current trends and comprehensive data, I'm confident that an overarching correction is not coming anytime soon. In fact, the housing market shows signs of continued strength. Take foreclosures, for instance. We're seeing the lowest foreclosure rates except for those two years of Covid forbearance.
In broad terms, don't expect a surge in inventory either. Sadly, the situation is deteriorating in most markets. The number of available homes in the US market is currently down by 20%. The number of offers per home is rising from 3.2 from march, even as we grapple with high interest rates.
Many may argue that a recession could shake up this scenario, and I agree - it will indeed shake things up, but not in the way most people think. A recession is likely to result in lower interest rates, a prospect many would welcome. However, when rates drop, mortgage applications increase. More people enter the market, leading to a hike in the average number of offers per home.
Consider this: when interest rates decrease by merely 1%, houses become 11% more affordable. This affordability fuels competition among potential buyers. As a result, those who can afford these houses start placing larger offers, driving up house prices even further.
So, what's my advice? Well, if you're financially stable and can afford a home today, I strongly recommend buying now and refinancing later to avoid this impending competitive turbulence. It's precisely the path I chose when I bought my home in November of the previous year. As a loan officer, I understand the landscape, and I truly believe in practicing what I preach.
Also, I do not want to dismiss the efforts that President Biden's administration is making, like the introduction of potential programs that would roll out over the next five years to create 800,000 affordable rental units and 2 million rehabilitated homes. These are much-needed steps in the right direction. I'm also thrilled about the push for apprenticeships and the encouragement towards the construction business, because we need more builders to address this issue. But we must face the fact that these efforts won't make a significant immediate impact on the broad US market. It's a long road to recovery.
I'm always open to discussions and eager to hear different perspectives. If you have any data that shows differently, I'm all ears. However, based on the numbers we have today, I stand firm in my belief that the US housing market will continue to grow stronger and more competitive in the near future. So, I heavily recommend acting sooner or bracing for an uphill battle in the years to come.
Mark Taylor | NMLS # 1504731 | AL: 67777, AZ: 0939604, CA: CA-DBO1504731, CO: 100520451, FL: LO35912, GA: 51692, ID: MLO-21237, IL: 031.0043598, KS: LO.0039017, KY: MC394725, LA:, MO: 18752-MLO, MT: 1504731, NE:, NV: 59226, NJ:, NM:, NC: I-170118, OR:, PA: 66651, RI:, SC: MLO-1504731, TN: 125173, TX:, VA: MLO-29826VA, WA: MLO-1504731, WV: LO-36484, WI: 1504731, WY: 6646
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