Perhaps people who need mortgages panicked and tried to lock in rates before interest rates go up further after the last CPI numbers came out. I agree with your last statement GON. Only it doesn’t stop at houses. It extends to everything. Americans are addicted to debt.
So, prices will go up or remain high only until Americans CANT afford the mortgage - or the bank won’t give them one. At a certain point interest rates WILL drag home prices down. I think we are at or slightly beyond the “peak” of housing prices and the drop has already started.
Yeah, it has started to some degree, more so overheated markets, one such place Jacksonville Florida.
Insane price appreciation over the last few years of 50% in some cases. We were going to buy there just a few months back, we never signed the contracts though.
Kind of glad we didnt, as much as I LOVE the Jacksonville area between HOA/CDD fees and climbing(?) Florida property taxes it wasnt worth it to us. It still bothers me to a small degree but wow when I did the numbers, the taxes and HOA/CCD fees are NOT cheap in Florida compared to the Carolinas.
Now, since we are on all the builders email lists I see the house price "sale" offers on some properties where we even walked the lots as the homes were being built from Yulee to North ST Augustine FL. Keep in mind I made 7 trips there starting around June, almost by the week the prices were climbing as the community was getting underway. Seemed like every two weeks or so homes we were considering were up another $10,000... Well, now I am getting emails of $40,000 to $50,000 price cuts on "select" homes of which I know the lots in two communities we were really serious about. So after first going to Florida before the price increases, if we bought back then, those prices are $20,000 less in one community and 40 to 50k less after the 7th time we were there. Not only that but in the second community we liked, we can buy the same home (on a different lot) for 40k less. Again, limited selection specials but if you think about it, they arent going to create a fire sale atmosphere, so there will be a trickle of these homes as they try to clean up inventory which use to get sold as fast as you look at the things.
There is one area of northern St Augustine holding the price on the homes but wow, there are a huge amount that have not sold. DR Horton community in the World Golf Village.
We settled on the coastal area of NC/SC border. Much more tax friendly and we always went there for a week in the summers for a getaway. I dont think, no matter what happens to the market, where and what we are buying doesnt have much room, if any to fall.
Bottom line
Low interest rates = High home prices
Normal Average Interest Rates = Stable prices
High interest rates = Low home prices
All three above, monthly payment is the same.
The transition from artificially low rates of the last almost decade to normal market interest rates will cause pain as the builders and homeowner sellers are forced to lower prices to what the public can afford. Home values will go down and people will end up backwards or stagnant on their value of their homes and why its better to buy a home in a normal to high interest rate environment vs artificially low interest rate environment. You can refi the mortgage but not the home price.
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