As homes listed for sale witness a pronounced increase in price cuts, October recorded around 25% of sellers reducing their home prices—a significant uptick from the ~17% noted at the same time last year and the record low of ~8% in 2021. Despite this, home prices have only dipped by approximately 6% from their all-time high.
The current scenario reflects a supply-driven challenge, with a quarter of sellers adjusting prices even amidst historically low inventory. This echoes the weakened homebuyer demand reminiscent of the 2008 crisis. The situation remains delicate, and a substantial pullback in home prices could be triggered by the return of supply—a challenging prospect, given that 90% of homeowners have mortgages below 5%.
Much like the 2008 crisis, the housing market now calls for an external trigger to boost supply and navigate through the complexities of the current real estate landscape.
All it will take for a major pullback in home prices is a return of supply.
However, this is a big task as 90% of homeowners have mortgages below 5%.
Some sort of external trigger is needed to increase supply.
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— The Kobeissi Letter (@KobeissiLetter) November 8, 2023
Agreed. A further uptick in unemployment, especially if it indicates (as it often does) risk of recession, will likely provide more supply, especially given prices near historical highs, despite low rates that many existing mortgages feature. t.co/NO1tIP8aLB
— David Sommers (@dgsommersmkts) November 8, 2023