Buyer-Seller Demand Reveals New Shift
Buyer cancellations in the last quarter hit 68%; this is a new record as compared to the cancellation rate of 47% recorded back in 2008.
Builders are concerned about the weakening demand and the backlog of new homes without new buyers coming in to scoop them up and are sweetening the price tag in order to avoid a dead stop.
According to one published report, new home sales are down approximately 10% from their recent highs.
The streak dating back to 2012 in which for 124 consecutive months existing home prices increased is over. In November 2022, for the first time, prices declined 2.5% from the previous high of June 2022. But this correction is nowhere near as severe as the one back in the crash of 2010.
According to the Zillow Value Index, 79% of the 200 largest markets in September showed a price decrease. October showed a 76% decline in prices for those markets and November and December show declines of 64% and 67%, respectively. January’s decline was not as severe only, affecting 47% of these same markets reporting a decline in prices.
This reconfiguration of market was triggered by the doubling of mortgage rates from 3% to 6% in less than a year. Now rates are still above the 6% level, not providing any kind of incentive for home buyers to climb back into this unreal estate market.
The concern is the uncertainty of the mortgage rates, should they rise into the 7% level, housing is sure to remain contracted at best. But the shortage of available inventory plus the shortage of available buildable lots makes this market a difficult one to predict. Should the economy fall into a true recession, home values will surely suffer as a result of many first-time buyers buying at the top of the market. We will probably see the same thing occur that happened in 2008, when 0% was required down for purchase and buyers could not afford to cover their monthly nut.
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.
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