US Housing Market Drops over 2 Trillion in Value
The US housing market has been on a rollercoaster ride over the past two years, as the pandemic boom and subsequent downturn have affected different regions in different ways. According to a recent reports, the total value of US homes declined by $2.3 trillion, or 4.9%, in the second half of 2022. This is the largest drop in percentage terms since the 2008 housing crisis, when home values slumped by 5. (https://www.voiceoverherald.com/) 8% from June to December.
One of the main drivers of this downturn is the rise in mortgage rates, which more than doubled last year, making it harder for homebuyers to afford the high prices in the market. As a result, the median US home sale price fell to $383,249 last month, down from a peak of $433,133 in May. While this is a significant drop, it is worth noting that the total value of homes is still roughly $13 trillion higher than it was in February 2020, before the pandemic hit.
The impact of the downturn has not been felt equally across the country. The biggest declines were in pricey cities like San Francisco and New York, where the total value of homes slumped by 6.7% and 2.5% year-over-year in December, respectively. Other urban areas including Seattle and Oakland also saw annual declines. Meanwhile, pandemic boomtowns like Miami, North Port-Sarasota, and Charleston, saw annual gains above 17% in 2022, as tech workers fled for more affordable locales.
According to Redfin economics research lead Chen Zhao, “most homeowners will still reap big rewards from the pandemic housing boom,” despite the recent downturn. The pandemic led to a surge in demand for housing, as people looked for more space and the flexibility to work from home. This led to a surge in prices, as buyers competed for a limited supply of homes.
However, the recent downturn has provided some relief to homebuyers, who were previously priced out of the market. With less competition in the market, prices have become more affordable, although they are still high by historical standards. The decline in mortgage rates is also expected to provide some relief to homebuyers in the coming months.
Overall, the US housing market is still in a strong position than 2008, despite the recent downward pressure. While some regions have been hit hard, others have seen strong gains. The market is expected to continue to be driven by demand from homebuyers, as the economy recovers from the pandemic and people continue to look for more space and flexibility in their living arrangements. However, the market is likely to be more volatile in the coming years, as buyers and sellers adjust to changing economic conditions and shifting demographics.
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