“America’s homeowners are sitting pretty,” said Chen Zhao, economics research lead at Redfin. “They’re holding a massive amount of housing wealth, despite lackluster demand from buyers, because home values skyrocketed during the pandemic, and now a supply shortage is preventing those values from falling.”
Several factors contribute to this growth, and topping that list is the shortage of homes on the market. The report showed that many homeowners are reluctant to sell, fearing the loss of their historically low mortgage rates. This hesitancy, coupled with a demand that still outstrips the limited supply, has led to competitive market conditions, supporting the continued rise in home values.
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Additionally, the recovery from a market low around a year ago has influenced growth. The total value of US homes was nearing its lowest point at the end of 2022, partly explaining the significant year-over-year growth by the end of 2023. Home values typically dip during winter, but the end of 2022 saw an unusually sharp decline due to surging mortgage rates.
So, while homeowners who purchased before 2022 have likely seen their home values grow, those who bought more recently, when values peaked, may have experienced a loss.
Source: mpamag.com