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After one of the most dramatic real estate bulls in recent history, the housing market has taken a striking turn in recent months. More indicators point to a weakening real estate market, meaning patient investors who have waited for the hot market since the start of the pandemic could be richly rewarded in the near future.

Fewer mortgage applications, more price reductions, and a lower anticipated home price growth all point to a softening in the market

A recent indicator increasingly pointing to a slowing housing market is the New York Fed’s Survey of Consumer Expectations. The latest statistics from the June findings show that consumers expect average house price growth to slow to 4.4% in the coming year. On the same subject : Real Estate Complies With SEC Climate Disclosure Proposal With Strong Criticism. This is lower than the 5.8% year-ahead price growth consumers had just expected in May.

In the years leading up to the pandemic, consumer confidence about year-ahead house price growth ranged between 3% and 4.5%. Although the price growth of 4.4% is higher than the average consumer estimate in recent years, the figure has fallen sharply from the pandemic high of 6.2% in June 2021. The median price change for the coming year was 6. %, as recently as this last April.

Inflation has been cited as the main culprit in the rapidly changing housing market as the Fed battles to contain its record rate in 40 years. While mortgage rates rose sharply in the first quarter of 2022, there was some relief for homebuyers when weekly mortgage rates fell slightly in July. According to Freddie Mac’s historical mortgage rate chart, the average 30-year mortgage rate on July 14 was 5.51%.

Adding further to the story of the slowing housing market is the Mortgage Bankers Association’s weekly mortgage application survey. Taking the most recent data from the week ending July 1, the report shows that the total number of mortgage applications is down 55% from the same period a year earlier. However, the total number of mortgage applications is up 6% from the previous week and almost 3% from the previous month. Refinancing has fallen most markedly, dropping 5.5% in the past four weeks and over 78% in the past year.

Other key indicators of housing market health include total inventory and price reductions.

Reports from brokerage Redfin cover both topics, providing insight into a slow but steady shift from the strong seller’s market that the country has seen over the past 24 months. According to an inventory report, Redfin suggests housing supply has increased for the first time in nearly three years. The number of homes for sale rose just 2% in June, while total home sales fell 16% year-on-year.

In addition, more sales are falling through now than at any other time since the start of the pandemic. Nearly 15% of ongoing home sales fell out of contract in June, the report found. One possible explanation for the trend is high mortgage rates, the report suggests. As contingencies get longer, buyers can lose their rate lock, which often changes the equation for them. But others may withdraw from deals for other reasons, such as having doubts about a specific home or waiting for a less competitive environment.

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Having cash ready to go for when the market bottoms out

The rapidly changing nature of the housing market is demoralizing to many, especially millennial and Gen Z buyers who feel homeownership is becoming increasingly out of reach. On the same subject : Sources: Jalen Brunson will meet with Knicks and Mavericks before making free agent decision. But for those who had already built up a real estate portfolio before the pandemic, changing market conditions could present a strong opportunity for expansion in the coming months.

A real estate investor who spoke to Insider in March raised more than $1 million in cash through two recent refinancings to have the cash ready in the event of a significant correction.

“Now is the time to get as much money out of these assets as possible and then have the money available when the market corrects aggressively,” the New Hampshire-based real estate investor told Insider. “I don’t think it’s going to be a 50% correction because we just don’t have the bad loan structures we had in the Big One.

recession

, but it could be a price drop of 10% to 20%.”

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