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This Week In Real Estate – July 17, 2022

Central Oregon Real Estate - This Week In Real Estate

Rising Mortgage Rates & Economic Uncertainty.

Fast rising mortgage rates and economic uncertainty is impacting home sales and prices at the mid-way point of 2022. It was reported, this week in real estate, that one in four U.S. home sellers recorded a price reduction in June. 46.3% and 45.7% of Seattle and Portland area homes for sale reduced their list price in June. Below are a few newsworthy events from the second week of July that influence our business:

Housing Experts Say This Isn’t a Bubble.

With so much talk about an economic slowdown, some people are asking if the housing market is heading for a crash like the one in 2008. Here’s why economists and industry experts say the housing market is not a bubble ready to pop. Odeta Kushi, Deputy Chief Economist at First American, says: “this is not the same market of 2008…it’s no secret the housing market played a central role in the Great Recession, but this market is just fundamentally different in so many ways.” Natalie Campisi, Advisor Staff for Forbes, explains how today’s lending standards are different than those during the lead-up to the housing market crash: “Among the differences between today’s housing market and that of the 2008 housing crash is that lending standards are tighter due to lessons learned and new regulations enacted after the last crisis. Essentially, that means those approved for a mortgage nowadays are less likely to default than those who were approved in the pre-crisis lending period.” Another reason today’s housing market is nothing like 2008 is that the number of people looking to buy a home still outweighs the supply of homes for sale. As notes: “experts don’t believe the market is in a bubble or a crash is in the cards, like during the Great Recession. The nation is still suffering from a housing shortage that has reached crisis proportions at a time when many millennials are reaching the age when they start to consider homeownership. That’s likely to keep prices high.” Full Story…

Bolder Fed Inflation Policy May Catapult Mortgage Rates.

Inflation rose to a new 40-year high in June and is accelerating even faster than expected, according to data from the Bureau of Labor Statistics’ Consumer Price Index. “The Fed may be forced to raise interest rates even more aggressively than planned – even with the rising possibility of a recession on the horizon,” says Lawrence Yun, chief economist for the National Association of Realtors. “The mortgage market had already factored in several additional rounds of the Fed’s rate hike but may have to adjust a bit higher based on today’s uncomfortable inflation rate.” The 30-year fixed-rate mortgage averaged 5.3% last week, up from 2.9% just a year earlier, according to Freddie Mac. Meanwhile, home prices have risen 15% over the past year. The Federal Reserve’s next meeting is slated for the end of July. Many economists predict the Fed will tighten its monetary policy further to control inflation. That could lead to another 75- or 100-basis point increase in the Fed’s short-term benchmark rate. While the Fed’s benchmark rate does not directly impact mortgage rates, it does influence them. Yun said following the Fed’s last rate hike – its largest since 1994 – that the buyer pool could shrink as mortgage rates increase. Full Story…

Slowdown in Single-Family Permits.

Over the first five months of 2022, the total number of single-family permits issued year-to-date (YTD) nationwide reached 473,997. On a year-over-year (YoY) basis, this is a 2.0% decline over the May 2021 level of 483,878. Between May 2021 YTD and May 2022 YTD, 12 states saw growth in single-family permits issued. Thirty-eight states and the District of Columbia reported a decline in single-family permits during this time with the District of Columbia posting the steepest decline of 25.5% going from 208 permits to 155. Oregon and Washington have experienced declines of 5.2% and 10.9%, respectively. Year-to-date, ending in May 2022, the total number of multifamily permits issued nationwide reached 265,751. This is 17.3% ahead over the May 2021 level of 226,634. Between May 2021 YTD and May 2022 YTD, 33 states recorded growth while 17 states and the District of Columbia recorded a decline in multifamily permits. Oregon has experienced a decline of 11.4% while Washington has experienced an increase of 9.3%. Full Story…

Originally compiled & posted by Jason Waugh on the Berkshire Hathaway HomeServices Northwest Real Estate company blog.

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Mitch Darby

I am a real estate broker, architect (both licensed in the State of Oregon), and life-long Oregonian. If you are looking to buy or sell, I can help! I have Northwest Knowledge and am proud to be associated with Berkshire Hathaway HomeServices - Real Estate's Forever Brand!

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