EVERETT, Wash.–In what is being described as “an astonishing turnaround,” the pandemic-fueled housing boom is now “careening to a halt” in many markets, where the days of waiving inspections and bidding above the asking price now seem to be over, according to one new report.
“It doesn’t mean real estate is heading for a crash on the order of 2008,” stated Bloomberg. “But when a market reaches these heights, even a drop toward normalcy will feel steep. And of course, a recession could make everything worse.”
George Ratiu, senior economist at Realtor.com, told Bloomberg, “The housing market is absolutely in need of a reset. “Overheated markets are unsustainable. Prices will have to adjust. We’re seeing the slowdown in growth already. The question is whether prices drop or move sideways.”
Home Listings Increase
Bloomberg, citing Realtor.com data, noted that home listings, while still low, increased in June at the fastest pace in records dating to 2017. The cooling is particularly pronounced in pandemic boom areas such as Las Vegas, Denver and California’s Riverside and Sacramento, as well as further east in Austin, Raleigh, Nashville and Tampa.
“Sellers with lofty ambitions are having to pare expectations. In the Austin, Phoenix and Las Vegas metro areas, almost a third of listings in June had price cuts, the Realtor.com data show,” Bloomberg reported. “Soaring borrowing costs are only part of the issue. Stock-market turmoil and recession fears do little for buyer confidence. And with the country now in a form of Covid normalcy, many of the people who were apt to make pandemic-inspired relocations have already done so.”
‘Mountain of Equity’
But even with price reductions in many markets, sellers are in a position to reap big profits because they’re sitting on a “mountain of equity,” the Bloomberg report added.
It noted that in May, U.S. single-family house prices jumped almost 45% from May 2020, the biggest two-year increase on record, according to an analysis of National Association of Realtors data going back to 1968. That capped off a decade of rapid gains.
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