Home Values on Zillow Just Fell for the First Time in a Decade

Posted by Liza Alley on Monday, August 29th, 2022 at 2:52pm

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Home values decreased for the first time in a decade, according to Zillow, and that's just one of several signs it's finally getting easier to buy a house.

The Zillow Home Value Index dropped in July for the first time since 2012, according to new data from the real estate website. The index, which uses Zillow data to measure the value of a typical home, fell 0.1% on a monthly basis.

That decrease may not seem like a lot (home values are still significantly higher than they were last year and the year before), but it’s likely a welcome relief for buyers who have been struggling in the red-hot market.

"Home values flattening so quickly after recent record growth might surprise,” Zillow Chief Economist Skylar Olsen said in a news release, “but it's a badly needed rebalancing that gives homebuyers more options, more time to shop and more negotiating power.”

Home sales projected to fall 16.2%, Fannie Mae says in new forecast

Economists at Fannie Mae have once again been forced to revise their forecast for 2022 home sales downward, saying affordability remains a “major constraint” for homebuyers despite the recent easing of mortgage rates.

“Housing remains clearly on the downtrend — and has been for several months now — due to the combined effects of outsized home price increases and the significant and rapid run-up in mortgage rates,” said Fannie Mae Chief Economist Doug Duncan, in a statement.

Home sales expected to fall 16.2 percent

 

Source: Fannie Mae Housing Forecast, August 2022

In projections released Monday, forecasters with Fannie Mae’s Economic and Strategic Research Group said they now expect 5.78 million homes to change hands this year. That would represent a 16.2 percent decline from a year ago — a steeper drop than the 15.6 percent pullback forecast in July.

“Despite a pullback in mortgage rates over the past month, recent incoming data point to a faster near-term slowdown in sales than we had expected, especially for new homes,” Fannie Mae forecasters said.

Olsen attributed the slowdown in price growth to rising mortgage rates, which forced many prospective buyers out of the market as the cost of buying a home shot through the roof. Data released last week by the National Association of Realtors (NAR) showed that sales of existing homes (not new construction) were down 20% on an annual basis in July thanks to soaring borrowing costs.

Of course, the dip in the housing market isn’t happening equally across the country. Home values fell in 30 out of the 50 largest metro areas, according to Zillow. The biggest declines were in San Jose, California, where home values dropped 4.5% on a monthly basis in July.

What’s next for the housing market?

Experts say the changes in the market are a sign that the pandemic housing boom is coming to an end.

“As prices soften,” Olsen said, “many [buyers] renew their interest, and we will continue our progress back to 'normal.'”

NAR Chief Economist Lawrence Yun also expects the market to normalize in the coming months. “Home sales may soon stabilize since mortgage rates have fallen to near 5%,” he said in a statement, “thereby giving an additional boost of purchasing power to homebuyers.”

 

 

 

  •          Buyer opportunities have returned to the Puget Sound market
  •          Active listings have nearly doubled from a year ago
  •          The market balance is favoring buyers
  •          “We are seeing builders moving their price points down and providing incentives to buyers in closing costs and buydowns to help borrowers obtain lower interest rates.”
  •          Overpriced listings have missed the market.

KIRKLAND, Washington (August 4, 2022) – New statistics from Northwest Multiple Listing Service confirm reports of a shifting housing market, prompting one industry leader to suggest “all parties involved in a transaction today have to recalibrate.”

“Today’s buyers have their cups finally overflowing with options as residential inventory grows to about two months of supply,” said Dick Beeson, managing broker at RE/MAX Northwest Realtors in Gig Harbor. The MLS report summarizing July statistics show 2.01 months of inventory system wide.

Commenting on the “many moving parts” of the market and the need to recalibrate, Beeson said sellers “are starting to see that overpricing just ain’t in the cards right now.” He also noted buyers still have to compete with other would-be homeowners, and depending on the property, some sellers are receiving offers over their asking price. “Buyer and seller expectations have changed. It feels like things are starting to normalize a little,” Beeson remarked.

The market balance is favoring buyers, reported Dean Rebhuhn, owner at Village Homes and Properties in Woodinville. “After experiencing multiple offers, shrinking inventory, or not being able to include inspection or financing contingencies with their offers, buyers now have choices,” he explained.

 

 

 

Growing Number of Experts Calling for Substantial Home Price Declines

As inflation rises and mortgage rates climb, many may see their purchasing power shrink and their dream of homeownership fade. This also impacts our sellers who see their home values decrease (At least from the peak highs)

“Today’s buyers have their cups finally overflowing with options as residential inventory grows to about two months of supply,” said Dick Beeson, managing broker at RE/MAX Northwest Realtors in Gig Harbor. The MLS report summarizing July statistics show 2.01 months of inventory system wide.

Inventory of single-family homes and condominiums across the 26 counties served by Northwest MLS has not exceeded two months since January 2019 when there was 2.3 months of supply.

Commenting on the “many moving parts” of the market and the need to recalibrate, Beeson said sellers “are starting to see that overpricing just ain’t in the cards right now.” He also noted buyers still have to compete with other would-be homeowners, and depending on the property, some sellers are receiving offers over their asking price. “Buyer and seller expectations have changed. It feels like things are starting to normalize a little,” Beeson remarked.

 

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Real Estate Weekly Report - We’ve entered a “housing recession.”

 

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