The United States has seen the real estate market appreciate steadily and quickly in the last two years. But between July and August 2022, home prices had dropped by 1.1%, the biggest monthly drop since 2012 when the housing market crashed. Just like the 2012 crash, the current decline is a result of the Federal Reserve's efforts to cool off the booming housing market by hiking up mortgage interest rates.
Many experts worry that a major housing correction is just around the corner – which would negatively affect the rest of the economy. A declining housing market could mean homebuilders pull back new home construction, which would cause thousands of people to be laid off and create a long-term housing shortage. Additionally, a quick decline in home prices could initiate a surge in mortgage defaults and foreclosures.
National Averages are Misleading
National home sales averages do not accurately reflect the dramatic price drops in different parts of the country. For instance, on the West Coast and Southwest have seen big drops, but sales in Southern cities have continued to see substantial price increases in the same time frame – While Miami has since a 4.7% rise in price since May 2022, Los Angeles has seen a 6.5% decrease in price.
Some economists believe the distinct variations are because the west side of the U.S. has a history of housing instability. In contrast, the east side has an older housing supply, which translates to a richer expansion and renovation opportunity. Also, the federal government owns a significant amount of land on the western side, which inhibits their ability to increase housing availability.
Hire a Real Estate Attorney in New York
While the instability in the housing market is problematic for many investors, most economists agree that the U.S. financial system is not as weak as it was in 2008. But it is possible that the current declining housing market could force a regular recession.
If you are looking for help acquiring, transitioning, or navigating foreclosure proceedings in New York, Attorney Melvin Monachan can help. Mr. Monachan is a highly qualified and experienced real estate attorney who understands the complexities of the real estate market today. Call (347) 389-1682 to learn more, or contact us online today.
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