“Many of the metro areas seeing median list price declines have seen an [influx] of smaller homes come to market, which carry lower price tags,” says George Ratiu, manager of economic research for Realtor.com. “At the same time, several of the cities have unemployment rates, which, while still historically low, are above the national level. [This indicates] that buyers may face steeper affordability challenges from rising mortgage rates.”
While encouraging and giving some positive feedback on a potential market slowdown, this seems to be mostly based on listing price rather than sale price – we’ll need to wait a few months to see some more solid impact to the market. Most likely this is not a repeat of the Great Recession – that scenario was propelled by a subprime mortgage crisis first, and a recession later. These are mostly smaller decreases that do not necessarily signal a crash of that magnitude.
Interestingly enough, we can definitely see Los Angeles making the list. In the past few days, we came across a few properties in the area with significant price updates – although anecdotal, they are indeed relevant data points at this stage.
Also I can definitely feel the need for more and more exotic explanations to justify the trend change, whatever explanation is good as long as we keep the illusion of a strong growing market going.
It is still uncertain how far we can go to justify these trends until we can really be sure that a turndown is happening.