It seems as though we’re going from one crisis to another, and we don’t really have time to take it all in and take a look at all the consequences – one of them being the housing market recession. Keep reading to explore the housing market recession and its impact.
If the recession is causing you to go into debt you can’t pay off, it may be time to consider hiring a bankruptcy lawyer in San Marcos, CA.
What is the housing market recession impact?
Let’s take a look at the different ways the housing market recession has left its mark:
According to the National Association of Home Builders, homebuilder confidence has been noticeably decreasing for about nine months. It’s believed this is due to higher and higher mortgage rates and exorbitant prices which have made many prospective buyers opt out of purchasing a home. Builder confidence is the lowest it has been since 2014 and the start of the pandemic.
Homes are on the market longer
Around 63,000 home purchase agreements were canceled in July 2022. This makes up around 16% of total home contracts for this month. Since home sales were stalled in 2020 due to the pandemic, this is the highest number of cancellations.
This is why many homes stay on the market for a longer time. So, some buyers feel they can negotiate more now, ask for certain repairs, and get better prices. On the other hand, some buyers cannot purchase the homes they originally picked out because of increased interest rates and not qualifying for a mortgage.
Home price cuts in some markets, price increases in others
The Chief Economist of the National Association of Realtors has made the following comment: “We’re witnessing a housing recession in terms of declining home sales and home building. However, it’s not a recession in home prices. Inventory remains tight, and prices continue to rise nationally, with nearly 40% of homes [on the market] still commanding the full list price.”
On the other hand, there are builders who have been offering incentives to improve sales, such as free amenities, mortgage rate buydowns, and even price reductions. Also, declining home sales have brought about house price cuts in some markets. But even so, most prospective buyers are still not willing to take the risk.
Mortgage rates increase
As the Federal Reserve has been tackling inflation with several rate hikes, mortgage rates have sky-rocketed. The average 30-year mortgage rate jumped to 6%. This is the first time it happened since the Great Recession of 2008.
The Fed could change its plans
Aside from increasing construction costs and other factors, one of the main reasons for the housing market recession are the increasing interest rates caused by the Fed’s rate hikes.
However, the Fed might be willing to change course after such a negative impact. The longer the housing recession lasts, the more pressured the Fed will get. Either way, we have to find ways to deal with its fight against inflation, and if your way is to file for bankruptcy and get a fresh start, we know what to do.
Where can you find a reputable bankruptcy lawyer in San Marcos, CA?
Whether you’re just considering filing for bankruptcy or you’ve decided to go down this path, we, Chang & Diamond, are at your service. Our experienced and knowledgeable bankruptcy lawyers will answer all your questions and give you the necessary information during our free initial consultation. We’ll provide you with expert legal representation and support you throughout the whole process.