After staggering growth during the pandemic, the US housing market is beginning to cool — most rapidly along the West Coast.
The fastest-cooling real estate market is San Jose, California, according to a new Redfin analysis, which ranked U.S. metropolitan markets based on median sales prices, year-over-year inventory changes and other factors between February and May 2022.
Six of the top 10 markets are in California, including three in the Bay Area, and four other western cities round out the list.
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In comparison, Albany, New York, was the slowest-cooling housing market, followed by El Paso, Texas, and Bridgeport, Connecticut, Redfin’s analysis found.
One of the main reasons for cooling down across the country is rising interest rates, which have created “the affordability factor,” said Melissa Cohn, regional vice president at William Raveis Mortgage.
Indeed, more expensive areas, such as Northern California, where homes can easily sell for $1 million to $1.5 million or more, have been hit harder by 30-year fixed mortgage rates approaching 6%, the report finds.
For example, if you buy a million-dollar home with a 20% down payment, your monthly mortgage payment could be about $5,750 with a 6% interest rate, depending on taxes and the homeowner’s insurance, which is $1,400 higher than a $1,000. 3% interest, according to the report.
10 fastest-cooling U.S. housing markets
Here are the U.S. markets that have cooled the most in the past year, according to Redfin, and their median selling price as of May 2022.
10 slowest-cooling U.S. housing markets
Here are the U.S. markets that have cooled the slowest over the past year, according to Redfin, and their median selling price as of May 2022.
‘Cooling’ doesn’t mean buyers will see price drops
While growth is slowing in some markets, experts still don’t expect significant price declines in most markets. See the article : Ohio Politics Explained podcast: police reform after Akron death, abortion and impeachment.
“One of the reasons we’ve had this frothy, overheated market is simply a lack of inventory,” Cohn said.
Until then, Redfin’s analysis shows that some of the faster cooling markets have seen more inventory enter the market. In Seattle, for example, inventory is up 40.9% from the previous year.
House prices are still rising, albeit more slowly. According to the Federal Reserve Bank of New York’s survey of consumer expectations, expectations for average home price growth over the year fell from 5.8% in June to 4.4%.
“The rate of price increases will certainly slow down significantly,” Cohn said, forecasting a “healthy normalization” in the real estate market.
One of the reasons we’ve had this frothy, overheated market is simply a lack of inventory.
regional vice president at William Raveis Mortgage
Since many buyers have paid in cash in recent years, some buyers have forgoed appraisals, inspections, or even in-person visits to the home.
However, the market shift could give buyers more time to view properties, make an offer and buy the right home, Cohn said.
What cooling markets mean for homeowners
If you have recently purchased a home, you may be concerned about the future value of the home, especially in a refrigerated market. On the same subject : The commercial activity of the Inland Empire is still strong.
“The good news is that these buyers were most likely locked into a lower interest rate, so the payments should be more manageable than someone buying now,” said Matthew Chancey, a certified financial planner at CoastalOne in Tampa, Florida.
If you overbid on the property, you could be “underwater” in the short term, meaning you owe more on the mortgage than the house is worth, he said.
That’s not a situation you should necessarily rush to remedy. Kyle Newell, an Orlando, Florida CFP and owner of Newell Wealth Management, said homeowners who are underwater should spend extra money on emergency savings, such as potential job loss, rather than racing to pay off the mortgage.
Experts generally recommend setting aside three to six months of living expenses. But some advisors suggest more for added flexibility.
