The housing market will reflect a different configuration of correction moving forward.
Even though prices seem to have eased in terms of the trajectory of appreciation, the inventory shortage and the constriction on building supplies will continue to make housing a hot sector.
According to realtor.com, there were approximately 6.1 million homes available for sale back in 2021. As of May 2022, the national inventory of available existing homes fell to 5.4 million. This translates into a decrease of 18.7% fewer homes for sale than there were a year ago.
Though the actual number of sales has fallen, a great deal of that decrease is attributable to the decreased number of existing homes available for sale. In addition, buyers are continuing to pay more from mortgages and higher down payments, making the home purchase difficult for first-time buyers.
There is no normal
Should we enter into a period described as recession, this recession will be unlike any other negative economic cycle we have yet to experience. One reason for this being the job market continues to be very strong, and the overall infrastructure activity necessary at this time will continue to sustain a healthy job market. There may be a reconfiguration of the way businesses operate as it is with leasing offices, but the hybrid model has arrived and businesses will continue to adapt so they can function and attract high-caliber talent.
Anecdotally, there are a number of institutional buyers out there looking to purchase properties as a means of creating multiple streams of income. Wall Street is one of these markets but there are other markets, such as actual governments approaching farm property and other resource land that will prove to be valuable in the future. And what is clearly different from the last crash is that lenders are very cautious about how much they are lending and to whom they are lending, this feeling that higher credit scores and credit health are prerequisites.
Another factor that distinguishes this current market from the market of 2006 to 2008 is that there is not a large percentage of houses in foreclosure. The appreciation of the overall market for the last 30 months has erased a great deal of negative equity that had played into the last market decline.
One of the factors that will reflect markets that will not be able to sustain their current levels will be those that are experiencing high levels of migration such as Connecticut, New York and Pennsylvania/ In addition, California is also experiencing a high number of migrations.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.