We are officially in the third quarter of 2022, and while the year started off in a positive direction, there is lots of chatter about a recession and a housing market bust. Whether real or not, the chatter creates a slow down in spending on all sectors, and that includes the housing market.
As predicted, the feds have hiked interest rates 3 times already this year, and they are projecting to increase at least once more by the end of the year. However, as of today, the average interest rate on a 30 year mortgage is still 5.5% and we are nowhere near the 7% that people were chattering about in the 2nd quarter.
While I am not an economic expert, my 17 years of experience in Houston real estate has given me some insight on what to expect when the housing market shifts.
The second big word to watch besides Recession is Affordability. Let’s face it, with an average of 20% appreciation on home prices in Texas over the last 2 years, we were already on track to price the housing market out of range for many buyers. Now with interest rates already 2 points higher than this time last year, home buyers will either have to decide to hold off buying or they will have to lower their budgets.
In my humble opinion, the cool down of the housing market is a good thing for buyers. Due to abnormal low inventory levels, buyers have been paying above market for the last two years in order to compete with multiple offers. At least now, buyers can expect to pay market value for a home, rather than overpaying.
I am fortunate to be a founding member of the Houston Relocation Network as well as a member of the Greater Houston Luxury Group, so I am able to gauge market opinions with some of the top Realtors® in Houston on a monthly basis. In our last meeting, top Realtors® in Houston all acknowledged that they have seen the showing activity slow down on listings, so Houston is feeling the impact of a market slow down.
I remain firm in my belief that Houston’s housing market will not slow down as quickly as the rest of the United States because our housing market typically follows oil and gas prices by 6-12 months, and with oil prices remaining around $100 a barrel, our housing market should remain strong. A “slow down” is a nice reprieve from the crazy fast pace and high prices that we have seen over the last two years, and buyers will actually stand a chance to buy a home without overpaying for it.
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