Ep #65 - When will the Next Housing Recession Hit? + Economic Housing Questions & Answers

Since October 2021 came to an end, the housing markets are demonstrating signs of rebalancing, as evidenced by a steady pace of transactions and more moderate price growth. As more homeowners list their homes for sale, these homes remain on the market for longer periods of time. Despite this, buyers must be prepared to act quickly, even if they get a few additional days to decide. According to realtor.com®, numerous cities that experienced bidding wars earlier this year are now experiencing a more tranquil housing market, with price reductions bringing sky-high asking prices back down to earth. While the market continues to be active, there are fewer competing offers and contingencies have returned, both of which are clear indicators of a healthier housing market. For buyers, approachable mortgage rates and less competition mean increased chances of finding the perfect home. Nonetheless, buyers of a median-priced home will pay an additional $142 toward their mortgage payment today compared to a year ago. The FMHPI is an indicator for typical house price inflation in the United States. It indicates that home prices increased by 11.3 percent in the United States in 2020 as a result of robust housing demand and record low mortgage rates. Growth is expected to slow to 7 percent in 2022, according to their latest forecast. The pace of home sales has cooled since the first quarter of 2021 when it was at 7.2 million. Freddie Mac predicts home sales to hit 6.8 million for the full years 2021 and 2022. Additionally, they forecast house price growth of 16.9% in 2021. However, they expect house price growth to slow to 7.0% in 2022. Strong house price growth is expected to lift home purchase mortgage originations from $1.9 trillion in 2021 to $2.1 trillion in 2022. With a higher mortgage rate forecast for 2022, they anticipate refinancing activity to soften, with refinancing originations declining from $2.6 trillion in 2021 to just below $1.0 trillion in 2022. Overall, Freddie Mac predicts that total originations will dec