The United States is suffering the second largest housing price correction in the post-World War II era
That The US housing market is experiencing its second largest housing price correction in the post-World War II era.
Macro Trends Advisors founding partner Mitch Roschelle attributed the massive correction to Americans’ uncertainty about the markets and their “unrest” regarding the economy. He explained on “Varney & Co.” Friday that “the shoe to drop” would be if the nation begins to see an increase in unemployment, which could cause a “leg down” in the housing market.
“A couple of things are going to make it go in the opposite direction, meaning house prices go up. One is security. And when you don’t know if interest rates are going to go up or not. I think that’s what’s driving a lot of people away from buying because they just don’t know if prices are going to be cheaper in two months and they just want to wait,” Roschelle explained to FOX Business. Ashley Webster.
GOV. RON DESANTIS TAKES STEPS TO ‘HELP THE AVERAGE PERSON’ HOME ADVICE: REAL ESTATE EXPERT
“And the other thing is turmoil about the economy. And I think the shoe to drop there would be if we start to see layoffs and we start to see unemployment start to rise, I think it can be something that causes a leg down in the residence. market in a big way.”
Roschelle’s comments come after the massive power shift taking place in the property market. Arguing that power has “completely shifted[ed]” away from the sellers, further “limiting” the country’s struggling housing supply.
“Right now I’d say it’s a buyer’s market. I think the power has completely shifted from the seller to the buyer. Doesn’t mean you don’t see some bidding wars, because again, I think statistically across the country, we’re at 3.3 months of supply. So it’s still relatively low,” Roschelle said.
“So if there’s a house that hits the market that’s perfect and it ticks off buyers and there’s buyers out on the market, I think you might see the occasional bidding war, but that’s mostly, you know , it’s one or two people chasing that house. And we don’t see that. We don’t.”
In addition to the real estate markets’ supply and demand problem, the average home price is expected to fall from the pandemic-induced peak.
According to Fortune.com, housing prices in the United States in October 2022 is 38.1% above March 2020 levels. Roschelle predicts that the average house price will have to fall by 10% to 15% from its peak in 2022.
EXISTING HOME SALES TUMBLE 7.7% IN NOVEMBER, 10TH STRAIGHT MONTH OF DECLINE
“My 10% to 15% [prediction] is from the peak in 2022, where we land when average house prices are down 10 to 15%. Which, if we are talking about the stock market, it would definitely be seen as a correction, but not a bear market. What you have to remember is that from February 2020 house prices rose by a whopping 40% to where we are today,” explained the housing expert.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“So what we do is we give back maybe, at most, a third or a quarter of the gains that we realized. But that doesn’t help someone who just bought a house at the top of the market and now has something , 10% has been lost,” concluded Roschelle.
