What To Expect for Housing as 2022 Wraps Up
Prices hit their peak in May 2022, shortly after mortgage rates hit 5% and before they peaked over 6% in June. Once that happened, buyer demand dropped dramatically and the reflection in prices started to show a trend downward. Now mortgage rates are near 7% and sale price per square foot is down 9.6% over the course of 4 months, currently measuring less than 1% higher than January 2022 and representing the elimination of appreciation achieved from January through May.
66% of active sellers in the MLS (new homes excluded) have owned their home for 2 years or longer. This means that even with the most recent downturn in price, the 2-year appreciation rate from September 2020 to September 2022 is still 40.3% based on per square foot measures, and the median sale price is $112,000 higher, indicating most sellers have enough equity to shoulder the added costs to sell in this marketplace.
We’d like to believe the market will do what it did following the 2012 recovery period. And that is, get back to the sustainable 4 to 5% average long term appreciation (seen both locally and nationally) and not the 2007-08 crash in the market that essentially wiped out the staggering 45% gains of 2004-05.