I read the article “Existing home sales dip slightly in August, for the 7th month in a row” and it talked about the decreasing pricing on the housing market. For the 7th month in a row the price of homes in the housing market has dropped .4 percent in August which is worse than predicted. Down 19.9 percent from one year ago today the housing sector has taken a hit making peoples houses worth less and less. The article states that “ the housing sector is most sensitive to and experiences the most immediate impacts from the federal reserve's interest rate policy changes. And with interest rates continuing to rise another .75 points the housing market will keep being affected in a negative way. It states that more recently mortgage rates have climbed because they are anticipating fed rates to grow as well. With the housing sector being so closely tied to the Fed's interest rates as we see the feds increase the interest rate more to try and slow the consumption in the U.S you will see the housing market go down more and more for the next couple of months. And in another article I read “Jerome Powell in the spotlight as Fed expected to raise interest rates again” states that aggressive interest rates will work to calm down the inflation in the country, and with this they are expected to have another big raise. After the last two directly affecting the current housing sector I believe this will do the same, and that is why I believe we will continue to see a drop in housing prices.
The Existing Home Sales numbers drop is not surprising with the level of inflation and increasing interest rate. Im wondering if the term we can use to describe this trend is a "housing recession". The article listed below suggests that homeowners are not being realistic, that there is more bargaining power with high prices and interest rates. Do you think only home sales and home building is entering a recession, like the article asks?
ReplyDeletehttps://www.cnbc.com/2022/08/23/what-a-housing-recession-means-for-homeowners-buyers-sellers.html
I wonder if the rising interest rates paired with higher prices of materials used to build houses have discouraged people from buying homes enough to lower GDP. In class we learned that the Investment portion of GDP includes expenditures on housing and if these trends continue, I feel it could be possible that GDP is effected.
ReplyDeleteIt is interesting that the housing market is so closely tied to the interest rates. House prices falling is a very rare thing to happen in the housing market and I believe that this has not happened since the 2008 recession. I wonder what this means for the future of the housing market as this could equate to being a good time in 2023/2024 to buy a house as the housing market has so consistently increased over the decades. Especially when you think about buying a home 10 years from now and that this would be a good time to purchase properties if this trend continues.
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