Five Signs the Housing Market is Cooling
If you are in the market for a new home you may be wondering if the rapidly expanding size of the housing bubble has eased and is beginning to cool down. There is good news for home buyers, the ridiculously fast pace of the real estate market has been slowing down for a while now, here is why:
Home Prices are Subsiding
Although home prices continue to go up year over year, there has been an evident shift in the market that may be considered more of a normalization than a correction. The rapid pace following the pandemic boom in early 2022 was too hot not to cool down. Though home prices are still on the rise, just as they have always been, the growth of the increase has continued to subside.
Increased Levels of Inventory
Over the last couple of years, all economic markets felt the strain of supply and demand. The housing market was no exception, demand for housing was high and the supply was low, in turn causing home prices to rise.
Despite the fact that there are still fewer homes on the market than those at pre-pandemic levels, in early 2023 the number of active listings in the U.S. has increased dramatically from that of the previous year, in fact, a whopping 65.5%! Buyers will have more inventory to choose from and continue to see more homes on the market as 2023 progresses.
Listings Spending More time on the Market
The challenges within a red-hot real estate market the last couple of years saw low inventory, bidding wars, fast sales, buying sight unseen and higher prices. Fast forward to January of 2023, the average home spent 75 days on the market. The pain of rising interest rates and higher mortgage payments cause pause making house hunting less attractive for those considering entering the market.
Less Interest in Buying
One of the truest signs that the housing market is cooling off is that people are not showing interest in buying homes. We know this because fewer people are applying for mortgages. In addition, consumers have an eye on rising interest rates and the overall cost of living.
Sellers Lowering Their List Price
A significant indicator that the housing market is cooling, as home sales continue to slow month to month buyers may actually start to see prices dip, sellers are lowering their asking price. In the cooler market, there are fewer buyers, sellers are getting nervous and in order to beat out the competition are more willing to chip away at their list price.
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