Interactive map update: Adjusted (or missing) home prices in the 400 largest US housing markets

Across the country, mortgage brokers and builders are scrambling to millions of potential buyers sitting on the sidelines after last year’s historic mortgage rate shock. The numbers aren’t pretty: On a year-over-year basis, mortgage applications are down 36.4% and Existing home sales fell by 35.4%.

When free fall house deals in the second half of 2022, house prices are less affected. As of October, seasonally adjusted U.S. home prices fell only 2.4%, measured in Case-Shiller national house price index. On the one hand, that marks second largest home price adjustment after World War II. On the other hand, it pales in comparison to the 26% drop in U.S. home prices between 2007 and 2012.

Going forward, Moody’s Analytics chief economist Mark Zandi predicts the story will start to change: Free-fall home sales will soon bottom out, while home price corrections will continue.

“Demand for housing (home sales) is close to bottoming, housing supply (residential start-up and completion) has not bottomed out and house prices have a long way to go before reaching their lowest point,” said Zandi. Asset.

At a time when home prices in the US bottomed out, Zandi expects them to be 10% below the 2022 peak. He’s not the only economist who thinks house prices will continue to fall: Of the 24 major housing forecasters tracked by Asset17 predicts that U.S. home prices will fall further in 2023. (Seven other firms expect U.S. home prices to stay flat or increase in the low single digits in 2023).

“The downturn in the housing market, caused by the rapid rise in mortgage costs, continues to cause significant concern to us. James Knightley, chief international economist at ING, says prices have risen sharply over the past few years as demand outstrips limited supply for housing, but the process is in marked reverse. His firm predicts home prices in the US will fall about 10% from peak to trough.

Remember, when a group like ING or Moody’s talks about home prices in the US, they are talking about the national aggregate. Whatever happens next will likely vary significantly by market. After all, there’s a reason all kinds of industries want to talk Real estate is local.

To better understand the story of house prices in the area, Asset consider Zillow Home Value Index (ZHVI) for November 2022.*

As of November, home prices in 254 of the country’s 400 largest housing markets were below their 2022 peak. In those markets, the average decline was 2.1%.

“Home values ​​fell 0.2 percent in November, continuing the slow decline that started this summer. Again, the closest possible cause is high mortgage rates,” write Zillow researchers. “While national prices have only fallen slightly, they have been more severe in many previously very hot housing markets.”

The markets hardest hit by the correction fall into one of two groups.

The first group is urban booms, often second home markets or emerging cities, where remote workers have moved during the pandemic and push local house prices beyond what local income can support. That “foam” could explain Why are house prices falling faster in boom markets? such as Coeur d’Alene, Idaho (where home values ​​are down 10.8% from their peak); Austin (down 10.4%); Phoenix (down 8.1%); Las Vegas (8% off); Salt Lake City (down 7.9%); and Reno (down 7.6%).

The second group includes high-cost markets along the West Coast, including places like San Jose (where home values ​​are down 10.6% from their peak); San Francisco (down 9.5%); Santa Cruz, California (down 8.4%); and Seattle (down 5.8%). Historically, those high-end markets have been very vulnerable whenever the stock market slips into bear territory or mortgage rates spike. Of course, both warning signs happen in 2022.

While house prices in 254 major markets are below their 2022 peak, 146 other major markets remain at their 2022 high. Mortgage rate shock is happening has not yet caused family values, as measured in zillowfell into markets like Indianapolis, Miami and Philadelphia.

So the coast is clear in markets like Miami and Philadelphia, right? Not so fast, Moody’s said.

While the home price adjustment has yet to affect inventory-scarce markets like Miami and Philadelphia, it could still happen this year. Moody’s expects home prices to fall further this year in every major housing market in the region. In cities like Miami and Philadelphia, Moody’s expects peak-to-trough declines of 16.9% and 5.3%, respectively. (This is Moody’s outlook for the nation’s 322 largest markets.)

When Housing recession is happening has moved into the US housing market has gone from inflationary to deflationary mode, it has only recently reached cumulative gains throughout Pandemic Housing Explosion. As of October 2022, US home prices are still 38.1% higher than March 2020 levels.

Even in the housing markets hardest hit by the correction, including San Francisco (down 9.5% from the 2022 peak) and Austin (down 10.4% from the 2022 peak) ), prices are still much higher than pre-pandemic levels. Indeed, as of October, home values ​​in San Francisco are 16.9% higher than pre-pandemic levels while house prices in Austin are up 57.1%.


*Note: The Zillow Home Value Index (ZHVI) is a measurement of typical home values ​​in a given area. Based on zillowthe index “reflects typical values ​​for homes in the 35th to 65th percentile range.” Asset pulled the “raw version” of ZHVI which is Not seasonal adjustment.

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