With the close of Q4 approaching, it seems housing market activity has been cooling. As I noted in a prior post, there have been hints the momentum that sparked the housing recovery in late 2012 might be slowing. With certain markets demonstrating a potentially volatile acceleration in property values, this development wouldn’t be entirely healthy. That being said, there seems to be a roster of newly emerging housing trends.
As a new report from Bloomberg notes, the so-called “bidding wars” that caused metro housing markets to heat up show signs of decelerating. Much of this is a natural outgrowth of the post-recession jump in home prices. Certain areas are sustaining median home prices that are too elevated for aggressive purchase, leading a leveling off or potential decrease in property values. In terms of hard specifics, the Bloomberg story outlines that asking prices were lowered on about 25 percent of all listings in September. Citing figures provided by Seattle-based brokerage firm Redfin, the story points out that prices were cut on 23.8 percent of all listings in October as well.
Taking this into account, it appears that we’re seeing a slight reversal in the revving up of prices that defined the housing market up through Q3 2013. It’s also a clear indicator that market trends have begun to shift away from the rapid-purchase paradigm that emerged this year. The Bloomberg report further outlines this, noting that contracts to buy previously owned residences plunged for the first time in three years this September.
Some of this seems precipitated by a rise in borrowing costs. Mortgage rates have risen, which has motivated financially cautious young buyers to further reconsider (or stave off) settling on homes. According to figures provided by Freddie Mac, the average rate for a 30-year fixed loan jumped to …read more