Long-Term Decline of the Real Estate Market: NAR Measures of Single-Family Homes in the Fourth and Fourth Quarters
The short answer is that prices are likely to decline further, but not as much as during the housing bust. According to S&P Core Shiller, national home prices have fallen 27% from their 2006 peak to the 2012 trough.
In the fourth quarter, the monthly mortgage payment on a typical existing single family home with a 20% downpayment was $1,969 according to the NAR. The monthly payment went up in the third quarter last year, but it was still a huge increase compared to one year ago.
Instead, prices for single-family homes climbed in nearly 90% of metro areas tracked by NAR in the fourth quarter: 166 markets out of 186 saw prices still going up. The national median price of a single-family home increased 4% last quarter from one year ago.
The price of a home in the state of Idaho is already falling, with prices plunging 3.9% in September.
In September, home prices declined in Phoenix, Las Vegas, and Austin, as well as the rest of the country.
The buying of apartments in Manhattan skyrocketed in 2021 as the city bounced back from the worst of the Pandemic. The market plummeted at the start of the next decade as sales dipped and prices went up. The only outlier is that inventory is still slow to materialize.
The largest share of condos sold were one-bedrooms with a median price of $1,140,000. The median price for a two-bedroom condo was $2,150,000. Median prices of co-ops were lower, at $710,000 for a one-bedroom, and $1,325,000 for a two-bedroom.
The Fourth Quarter of 2019: A Rise and Fall of the City-Dependent Real Estate Markets in the Weakly Developed West
As a result, there were 6,523 listings in Manhattan at the end of the fourth quarter. The fourth quarter of 2021, was 5% higher than the fourth quarter of the preceding year.
Looking at the market metrics of prices, sales and inventory, both prices and sales are going up from their pre-pandemic levels at a modest pace, with prices rising 10% above 2019 levels and sales 6% higher.
Miller said the low inventory in this circumstance was the result of mortgage rates being cut to the floor. Normally, you would expect to expand inventory with high rate growth.
“Sellers aren’t going to get the prices they got in 2021 and buyers aren’t going to get much improvement on affordability from 2022,” he said. “Meanwhile, banks are disappointed because their pipeline is going dusty.”
Lawrence Yin, the chief economist at the NAR, said that some areas with high prices may see a double-digit price drop because of weaker employment and more residents moving to other areas.
Nearly all of the most expensive places to buy are in the West and half of the 10 most expensive cities are in California. Several of those places are seeing prices fall the most.
The good news for buyers looking for price relief is that the 4% median price hike in the fourth quarter is less than the 8.6% increase in the third quarter. Far fewer markets experienced double-digit price gains in the fourth quarter.
Due to limited supply, prices are expected to remain stable in the vast majority of the markets.
The Fourth-Federal Cost of a First-Time Buyer’s Mortgage: New Real Estate Prices in Florida and South Carolina, and Less Than $30,763 Million Dollars
Farmington, New Mexico, saw the biggest price increase in the fourth quarter, up 20.3% from a year ago. It was followed by Sarasota, Florida, up 19.5%; Naples, Florida, up 17.2%; Greensboro, North Carolina, up 17.0%; Myrtle Beach, South Carolina, up 16.2%; Oshkosh, Wisconsin, up 16.0%; Winston-Salem, North Carolina, up 15.7%; El Paso, Texas, up 15.2%; Punta Gorda, Florida, up 15.2%; and Daytona Beach, Florida, up 14.5%.
Yet there were 16 markets where a family needed a qualifying income of less than $50,000 to afford a home, although that was down from 17 the previous quarter. Peoria, Illinois, with an income of $33,660 is one of the places where a family can qualify for a loan with an income of $48,172.
First-time buyers were evidently pushed to a breaking point on affordability. In the previous quarter, they spent 37.8% of their family income on mortgage payments. A mortgage is not considered affordable if the monthly payment makes up 25% of the family’s income. Generally, a common financial rule of thumb is to not spend more than 30% of your income on housing costs.