11/28/2022
Happy Monday Morning!
I get asked often what is happening in the housing market with regard to pricing.
Here is a short piece based on a very recent report released by Morgan Stanley (MS) summarizing its outlook on mortgage prices.
In sum MS looks at economic and pricing data along with popular measure of housing prices called case-shiller to predict that overall home prices will ultimately decrease around 10% from their peak in 2022 (which were almost 40% higher than 2019!!) to what it estimates the bottom will be in 2024.
As we have been observing, housing inventory continues to stay low as the “lock up effect” of homeowners refusing to sell homes that are mortgaged at low interest rates keeps fewer homes from going on the market because sellers don’t want to sell a home they mortgaged for a low rate and in which they probably have equity to buy at inflated prices and mortgage rates.
So even though higher interest rates has lowered demand, this lock up effect has lowered supply which keeps prices relatively more stable.
Two alternative cases are presented, one for a bull (stronger) market that would see the maximum drop in prices at 5% and a bear (bigger and longer drop) market that would see a 20% decrease if inflation remains high and jobs/wages continue to lower.
Regardless, MS does not see a repeat of the 2008 crash becasue of stronger market fundamentals and bank’s being better prepared to manage distressed situations.
Following the market is important, but life needs are even more important. If you need to make a move, let’s talk about your case. Each situation, like each property is different. I can look at your situation and provide the insight needed to make an informed decision.
Note that the commercial real estate market is currently stronger than the residential market.
The same dynamics as discussed above impact commercial real estate, which keeps prices more stable, but because market participants tend to buy and sell commercial
Real Estate for business rsther than personal
reasons, the lock out effect is not as strong in the commercial market.
This is good for buyers and sellers.
Listing Leaders Commercial Specialty: We Know Commercial.
Have a great day!
Peak-to-trough, Morgan Stanley expects U.S. home prices to fall 10% by 2024.
