New Home Price Reports Show Why the Housing Market Correction is Over

New Home Price Reports Show Why the Housing Market Correction is Over

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In case we haven’t said it enough, it’s time to stop waiting for home prices to drop!


This week, we got even more indication that the housing market correction is behind us. The Case-Shiller National Home Price Index, which is one of the leading measures of U.S. residential real estate prices, rose 0.2% in February 2023 compared to January. This is the first time the index has shown an increase in the average home price since June 2022.


As of February (the latest index that is available), seasonally adjusted home prices are only down 2.8% from their peak in June 2022. And on a year-over-year basis (compared to February 2022), prices are up 2% nationwide.


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Need more proof? The Federal Housing Finance Agency (FHFA) also recently released it’s house price index for February, and it shows that house prices increased by 0.5% in February compared to January. Year-over-year the index is up 4.0% (both numbers non-seasonally adjusted). Compared to the June 2022 peak, FHFA’s numbers are only down .2%.


What does this mean? The moderation in home prices we’ve been experiencing thanks to high interest rates is losing steam. Earlier this year we started to see see new-home sales rise and mortgage applications bottom out, and this rise in prices is the next step toward a healthy housing market with continued appreciation.


Why Are Prices Rising?

The reason home prices fell last year is not complicated – higher interest rates made monthly mortgage payments a lot more expensive. This, combined with the Pandemic Housing Boom that resulted in a 41% increase in home prices from summer 2020 to summer 2022, reduced housing affordability to the lowest it had been since the housing bubble that preceded the Great Recession.


So why are prices rising again? Improvements in housing affordability and a continued undersupply of homes.


Home prices are determined by two things: supply and demand. Yes, there are few buyers in an inflation-heavy economy with high interest rates, but in order for home prices to go down there needs to be fewer buyers than sellers – and that is just not within the realm of possibility today.


There is a lot of pent-up demand in the housing market right now that has been kept at bay because of the affordability problem. But as affordability improves, we are going to continue to see more people move forward with their homebuying plans.


And affordability has been consistently improving this year as rates have fallen and prices have moderated. As we move into the busy summer buying season, you can expect prices to continue to climb as the warmer weather and lower interest rates bring even more buyers into the market.

When Will The Widely Anticipated Housing Crash Finally Arrive?

By Luminate Marketing Team • 13 May, 2024
Despite widespread skepticism, home prices continue to move higher in 2024. February witnessed an unexpected surge in home prices, climbing by 0.6%, which is considerably higher than the typical seasonal February slowdown observed in previous years. The real estate market continues to deliver consistent appreciation, as indicated by the CoreLogic S&P Case-Shiller Index, which recorded a 6.4% year-over-year gain, marking its eighth consecutive month of annual increases (see Figure 1 below). This rebound in appreciation marks a robust start to the year, with home prices now 1.3% higher than their peak in June 2022.

Overcoming Housing Market Fears

By Luminate Marketing Team • 06 May, 2024
The recent headlines broadcasting mortgage rates surpassing the 7% mark have instilled a sense of apprehension among potential homebuyers. In a market perceived as increasingly unaffordable, it's easy to feel discouraged. However, with the right mortgage strategy, you can transform this challenging market into an opportunity.  Historical Perspective on Mortgage Rates While current rates hovering around 7% seem daunting, a historical review reveals a broader context. During the early 1980s, mortgage rates soared to 18% and even in more stable times, rates have frequently fluctuated above 10%. This historical perspective is vital because it demonstrates that while today’s rates are higher than in recent years, they remain within a historical long-term normal rate range.

Why Cash Buyers Dominate the 2024 Real Estate Market

By Luminate Marketing Team • 28 Apr, 2024
The 2024 real estate market is ROUGH. Losing to multiple offers, emotional frustration, and the stress from competing offers is discouraging to say the least. Notably 32% of home sales are being clinched by all-cash buyers, the strategic advantage of wielding cash has never been clearer. This resurgence in all-cash transactions underscores a market where immediacy and certainty reign supreme, especially as home prices continue their upward trajectory against a backdrop of scarce inventory. Within this context, it’s prudent to evaluate every option that can help you sell an existing home and get your offer accepted on a new home. Navigating the Alternatives iBuyers : These entities provide a quick, straightforward selling process for homeowners looking to bypass the traditional market. By making instant cash offers, iBuyers appeal to those seeking immediacy and convenience. However, this often comes at a cost, including service fees and potentially lower offer prices, as the iBuyer model is designed for speed over maximizing seller profits. Power Buyers : Power buyer programs cater to homeowners wishing to purchase their next home before selling their current one. They typically employ financial tools like bridge loans to facilitate this process, offering a solution to the timing mismatch between buying and selling. While this approach adds flexibility, it can also introduce complexity and additional costs into the transaction. But it's important to remember that not all of the innovative iBuyer and Power Buyer programs are the same. It's all about finding the right fit for your situation. Luminate's Unique Approach At Luminate Home Loans, we've carved out our own niche in the market. We offer a program that turns our clients into cash buyers. This isn't just a minor perk; it's a game-changer. Being a cash buyer makes your offer far more appealing to sellers, cutting through the delays that often come with loan approvals. Our approach is designed with you, the homeowner, in mind. We give you the immediate advantage of a cash offer, coupled with the flexibility to choose the best financing option for you down the line. It's about giving you control and confidence in your home-buying journey. If you're navigating the complexities of buying and selling homes, our program might just be the solution you've been searching for. We focus on ensuring our processes are straightforward, your personal information is secure, and the transition to your new home is as smooth as possible. With Luminate, you're not just moving houses. You're stepping into a well-thought-out system designed to get you into your dream home with ease and certainty. If this sounds like what you need, we're here to make it happen.
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