home-prices-see-biggest-drop-since
You read that right folks, home prices have seen their biggest decline since 2011.
Does this mean the market is finally resetting or are we just seeing a small correction due to the increase in mortgage rates?
Home prices fell 0.77 percent from June through July, according to Black Knight, a mortgage software, data, and analytics company.
While that decline might not sound like much, it was the largest one-month decline in prices since January 2011.
It is also the second worst July performance going back to 1991, trailing only July 2010, when prices fell 0.9%, while we were well into the depths of the Great Recession.
Further price corrections are expected in the coming months as we move into what are typically more neutral seasonal months for the housing market.
Some local markets have seen steeper drops over the past several months, with San Jose, California seeing the biggest drop, as its housing prices are down 10% over the past several months.
Other markets seeing steep declines include Seattle, which is down 7.7%, San Francisco down 7.4%, San Diego down 5.6%, Los Angeles down 4.3%, and Denver down 4.2%.
Moodys Analytics found that 183 of the nation's 413 largest regional housing markets were "overvalued" by more than 25%.
Included in the overvalued markets were places like Boise, which was 72% overvalued, Charlotte, which was 66% overvalued, and Austin, which was 61% overvalued.
Looking ahead, Moodys Analytics projects the over-valued 183 markets will experience home prices falling between 10 and 15 percent.
That is assuming that a recession does not materialize.
If the recession hits, Moody’s Analytics projects that these 183 areas with significant housing-market overvaluations will fall between 15 percent and 20 percent.
Moodys Analytics is not the only one predicting these dramatic drops in pricing.
Economist Robert Shiller, who predicted the housing bust of 2008, believes that home price declines of more than 10% may be coming soon.
Meanwhile, Fitch Ratings says that there is a scenario where US house prices drop between 10 and 15%.
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https://www.youtube.com/watch?v=WiT60vacBUc
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