MINT HILL, NC – According to Politico.com, “we’re in a housing recession.” With the housing market cooling off, some experts believe it may go into an all-out slump. Of course, how much this impacts you depends on your specific market. It might be worse in the San Francisco market compared to the Mint Hill real estate market.
Interest rates have been going up, which has contributed to the housing recession. This has been one of the main reasons the housing market has cooled off quite a bit over the past few months. With the Fed raising interest rates, mortgage rates have nearly doubled compared to last year.
How Could a Housing Recession Impact the Economy?
Real estate makes up about 18% of the GDP in the United States. It’s also the most common sector to lead recoveries. As real estate slumps and heads into a recession, it will impact the economy on a significant level.
According to the Politico article, the Biden administration is touting strength in the labor market, but this is likely temporary or simply not the complete truth. With many companies reporting layoffs and others closing their doors, more than just a housing recession might be looming.
Home prices actually declined for the first time in three years last month. While they are still up compared to a year ago, the fast growth that had been happening has certainly slowed. As mortgage rates have gone up, many potential buyers have also left the market because they can no longer afford to buy.
Goldman Sachs has made a rather negative prediction to go along with their prediction of much higher oil prices. They have predicted that price growth will slow much more over the final two quarters of 2022 and fall to 0% in 2023.
Redfin reported that more than 20% of the homes listed for sale saw a price drop for July 2022. This was the highest level seen since 2012 when they started tracking this specific data.
Several experts have said that nobody really knows how bad it might get. Some think we are headed into a depression and a real estate market far worse than 2008. Others think it’s just a small blip on the radar and won’t be all that bad.
Experts tend to fall all the way in between these two extremes. Many believe the real estate market will continue to slow down and may head into a crash. It’s possible the summer selling season has propped the market up a bit and it could become far worse going into the fall and winter seasons, which tend to be slower than the summer in most real estate markets.
Where we are headed is hard to predict, but the real estate market is certainly slowing down. Some markets are slowing down more than others, but it’s likely, that all US markets will be impacted to some degree.
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