August 2022 San Antonio Housing Market Update
Does A Recession Mean Falling Home Prices
Many of us want to predict the future in real estate as much as possible when the need to move arises. Unfortunately, that is a task not even the most skilled can pull off. There are simply too many variables to account for, and when you add in Black Swan events like the Covid Pandemic, all bets are off.
Let’s dive into the effect recession has on housing prices historically.
As we study the last 6 recessions, we can see that overall across the United States A recession does not equal falling prices. In 4 of the last recession, we still saw positive appreciation growth. The largest exception to that trend is 2008 when the loose lending standards led to a decline in the housing market and caused a recession.
How Will A Recession Impact Mortgage Rates?
Over the past 6 recessions mortgage rates typically will end up falling. This is primarily due to the Central Bank lowering interest rates to stimulate the economy after too many job losses and production occur. So, if you are holding out for interest rates to return you may have to wait until the economy gets worse.
What Are Mortgage Rates Projected To Be?
Currently, mortgage rates are fluctuating wildly. As you can see projected rates in 2023 are lower than the current rates. As demand continues to fluctuate so will the interest rates. So, you might conclude that demand for mortgage rates will subside late in 2023.
Why Might Home Prices Stay Elevated?
With such a large price run-up, many are left wondering why home prices might stay elevated. And the answer is just as simple as supply and demand. Right now on average across the United States, there is a 3-month supply of homes. This pales in comparison to 2006 when we were in a balanced market leading up to the crash of 2008.
How Much Housing Inventory Is There In San Antonio TX?
Right now in San Antonio we have about 6 weeks of housing inventory. This is about half of what other markets have on average. Yes, there is more inventory available now than there was 3-6 months ago, but we are still much cheaper than in other markets. This will continue to be the reason prices may continue to see an increase in the coming years.
Will Foreclosures Impact The Housing Market?
Many people have memories of the 2008 housing market crash and the flood of foreclosures that hit the market. Well, currently the data does not support a large number of foreclosures entering the market this time around. Perhaps in future years maybe but currently the above chart shows how low the foreclosure activity is now compared to 2008.
Bottom Line
The real estate market is still anything but normal. I expect there may be some pain for overpriced homes in the short term as we adjust to the new interest rates. But overall prices should move modestly in the positive direction. After some time with elevated interest rates, we may soon begin to see a reduction in rates. Ready to make a move? Let’s connect!