Has the housing market landed … softly?
On Tuesday, the S&P CoreLogic Case-Shiller index showed that U.S. home prices rose from March to April for the third straight month. At last measurement, they were just 2.4% below their peak from last summer.
Even with mortgage rates basically doubling as a result of Federal Reserve interest rate hikes, housing prices ebbed a bit but never tumbled. Now, they’re back on the upswing. Does that sound kinda soft landing-esque to you?
If S&P’s Craig Lazzara had to summarize the national housing market in one word right now, “‘recovery’ would be my choice of words,” he said.
Not a recovery like the housing market tore its Achilles tendon and will be on crutches for a while. It’s more a recovery like the housing market sprained its ankle but now is ready to do some light jogging again.
“I think the data certainly support that view,” Lazzara said. “A 5% decline peak to trough, and now 2% still to recover. Yeah, it’s not so bad.”
Of course, there really isn’t one national housing market. Plus, rising mortgage rates have hit different parts of the country differently.
“There are more regional differences now than we were probably seeing in, say, 2021, when the whole market was just running forward,” said Nicole Bachaud, an economist at Zillow.
Southeastern cities like Miami and Atlanta are still pretty much in full sprint mode and never took much of a breather. Meanwhile, more expensive markets on the West Coast have slowed down considerably.
“We’re looking at San Francisco, San Jose [California], Seattle — that’s where a 7% mortgage rate really makes a big impact on that monthly payment, and you’re gonna be limiting the number of buyers that transact in those markets,” Bachaud said.
Seattle prices are down 12.4% from last year — the largest dip among the 20 metro areas Case-Shiller tracks. Sure, that’s partly because tech workers are still absconding to work remotely elsewhere.
But Seattle real estate agent Sharon O’Mahony said it’s important to remember how hot the market was in early 2022.
“I had a house sell down the street from me last year, which went $600,000 over list price, which was insane,” she said. “So when they talk about the property prices coming down, yeah, you’re coming down from that.”
As long as the listing inventory remains tight, O’Mahony said, it will be a seller’s market — which is true for Seattle and the rest of the country.
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