The pandemic real estate boom is officially over. Home price appreciation has stalled, with markets in the West leading the nation’s declines, according to a new report.
“Pandemic Boom Markets Cool Faster,” a report by First American, looked at affordability as part of its Real Home Price Index and found that a doubling in mortgage rates has seriously affected the spending potential of homeowners. home buyers.
In August, real house prices (adjusted for inflation) increased 49% compared to the previous year. But between July and August, real home prices fell 1.8%, according to the company.
Home price appreciation is expected “to fall further,” said Mark Fleming, chief economist at First American and author of the report, “as the hot seller market of early 2022 turns in buyers’ favor.” “.
The 30-year fixed rate averaged 7.32% on Friday, according to Mortgage News Daily.
Fleming told MarketWatch in an interview that home price appreciation could drop to the low single digits, but stressed that home prices had soared so much that they weren’t exactly collapsing.
“Prices are falling, appreciation is moderating in the housing market in general. We’re still selling 4.7 million houses a year, the typical amount of time is 19 days to sell a house, this doesn’t sound like a recession,” Fleming said.
Looking at home price appreciation in the nation’s top 50 markets, Fleming found that many in the West are among those that have seen the fastest percentage point declines in home price appreciation.
“Home price appreciation has slowed in all 50 markets we track, but the slowdown is generally most dramatic in areas that experienced the strongest peak rates of appreciation,” Fleming noted in the report.
The market with the strongest slowdown was Sacramento, where home price appreciation peaked in July 2021 at 23.5% and slowed to 4.6% in August.
San Francisco experienced the slowest annual pace of appreciation in August, at 1.1%, which was significantly lower than the peak of 17.6% in July 2021.
“It’s not surprising when you look at the list, most of the markets that are slowing down the fastest are our western markets,” Fleming said.
By contrast, many markets in Florida, such as Miami, are still holding up quite well.
Markets like Tampa and Miami benefit from strong interest from foreign buyers, Fleming explained.
“Buying real estate in the United States is considered a safe place to park your money, and you can spend some time there as well,” he said.
Considering migration from other states like New York, that results in strong demand for the Florida market.
Housing markets in the Midwest are also interesting to watch, Fleming said, given the quiet, slow but steady way they have been appreciating.
Do you have any idea about the housing market? Email MarketWatch Reporter Aarthi Swaminathan at [email protected]