The headlines continue to impress as follows:
Home prices increased 19.8% in February year over year, according to the S&P CoreLogic Case-Shiller national home price index.
The 10-city composite annual increase came in at 18.6%, up from 17.3% M-O-M
The 20-city composite was up 20.2%, rising from 18.9% M-O-M
Phoenix, Tampa, Florida, and Miami saw annual home price gains of 32.9% 32.6% and 29.7% respectively.
Locally concerning Metro Denver:
- Feb 2022/Jan 2022: +3.1%
- Jan 2022/Dec 2021: +1.6%
- Year-Over Year: +22.3%
However are the days of extraordinary price appreciation may soon be relegated to the history books. While the decade plus appreciation is unprecedented and the post-Covid bump continues to defy logic we may be in for a rude awakening. With the rise of inflation (transitory or not, will not engage in that debate) the Federal Reserve is tightening the reins on the economy leading to increasing mortgage rates which may eventually impact housing prices and their unimpeded trajectory.
It was not until last month (March, 2022) that the impact concerning interest rates began to be taken seriously with the 5%+ conventional becoming the norm. Thus today's release of statistics does not take into account the rise of mortgage interest rates. Some argue and I agree the burst in activity was to get ahead of rising interest rates.
In a more direct view of increased rates The National Association of Realtors has advised concerning a median-priced home financed with a 30-year loan, the monthly payment is $550 higher than a year ago, an increase of 46%
Add to this, prices historically tend to lag sales by about six months, and pending sales, which measure signed contracts, have been falling for four straight months through February, 2022.
Anecdotally the Spring Selling Season is active here in Denver with a burst of new listings. What I am noticing is price adjustments downward happening sooner and the days of homes selling within a weekend may be in the rearview mirror. While the irrational exuberance continues it is no longer unabated and the pinnacle of the real estate market may have already happened. Only time will tell.
No comments:
Post a Comment