The U.S Housing market continues to defy what it should be doing as home prices continues to shoot up and mortgage rates continue to slowly climb plus at least two more interest rate increases on the horizon.
What's Currently Happening
Home builders are constructing new homes to fill the void in the market caused by the lock-in effect, resulting in a crash in home prices due to scarcity, while fewer homes are being sold as sellers choose to stay put, leading to high prices and a lack of urgency to sell.
Fewer homes are being sold as sellers choose to stay put due to low mortgage rates, resulting in high home prices and a lack of urgency to sell.
Housing inventory is projected to decrease by 5% in 2023, with home price growth expected to fall by 0.6% for the year, making it difficult for homeowners to save for a down payment.
Price Changes In The US
However these price swings seem to be happening on opposite ends of the US.
Housing prices in 2023 are expected to decline on the West Coast but rise on the East Coast, with high demand and low inventory leading to a 5% increase in prices overall, while major cities like Austin and San Jose experience drops and cities like West Palm Beach and Miami see gains.
Higher housing prices are being driven by low inventory, slow construction, demographic changes, and fewer loans, but there may be a future increase in buyers and prices if lending restrictions are loosened, while foreclosures are currently rare and homeowners would likely list their homes for a higher price if they couldn't afford the payments.
No Reason
The big kicker is so many people bought houses in the last five years and have extremely low mortgages right now. This causes many not to leave and honestly most people live in their homes for a good 10-20 years before picking up and leaving to a new location. That's because of kids in school, job location moves and other factors such as that.
When we look at this we see a rather robust amount of the US population now in a good home, locked in and doing well. Money isn't constantly flowing out of their pockets to banks from loans which is giving them more money and time to actully live a life and not go through the endless grind to the honest to go slave system of debt the US has created for many.