Housing Market Crash Update – Home Prices Are Shooting Up?
Are the worst of home price declines behind us? You might be hearing on media and negative YouTube channels that the market prices or the home prices are going to crash 20% or they were going to crash 20% in 2022 or 2023. Well, in this video I’m going to show you and tell you that the home prices decline. And I’m going to tell you that home price declines are already behind us and we are on the way of home prices going up based on these numbers.
One thing is for sure, if you are a buyer who has been waiting for six months or a year or two years to prices to drop, well this may be the time to buy because seems like the home prices are going up. On the other hand, if you’re a seller and you were concerned last June in the summer of 2022 and fall of 2022, where there was more inventory and the home prices declined, now you may be wondering, is this the right time to sell? Well, the good news is if you’re a seller, home prices are going up. So this may be a good time to buy your home. But at any rate, if you’re a buyer, the best time to buy is when you are ready, willing, and able to buy. Despite the fact that the interest rates are higher than four years ago or two years ago, they were down to two and a half percent rate and now they are hovering around six to six and a half to 7%. But despite those facts, the best time to buy is when you are ready, willing, and able to sell.
In July last year, month over month, home prices were declining and they stopped declining now and they are going up month over month. According to Case Schiller, from January 2022 to June 2022, prices went up overall nationwide. Then in July, August, September, October, November, December, and January of 2023, they declined anywhere from 0.3% to 1%, and back in February of 2023, there was an uptick of 0.2% nationwide. Seasonally adjusted rates.
According to Federal Housing Finance Authority, in January, the first four or five months, there was a price increase month over month. And then in July, August, and pretty much in November, December there were price declines. But as of January 2023 and February 2023, they are inching up again. Similar to Core Logic, from January to June prices went up anywhere from 0.6% to almost 4%, and there was a decline from July through January 2023. And they’re back up in February and March of 2023. And as the report does not show right now because of the housing activity, and by talking to a lot of people, there are multiple offers being sent out everywhere. I just opened up in escrow on a house that was listed for $780,000 and we ended up getting it almost at $810,000. There were five offers. Luckily my buyers got it because it was an all-cash offer with no appraisal, no inspection, and no termite work. So we can tell by talking to other agents, by the housing activity, by the open houses, there’s 50, 60, 70 people coming to open houses and there’s two, three, four, up to 20 offers. That only means that the prices are going up. So spring 2023 is in full force. So that means that the buyers are out there looking, and despite the higher interest rate, despite the home prices, buyers want to buy.
And the other factor putting fuel to the fire is that while the buyers want to buy homes, there’s a shortage of inventory. So as the inventory has declined significantly, home prices are going up, quote, significantly. Of course, these numbers and stats are based on the US nationwide. And of course, there may be pockets. The market is hyper-local. So in your area, they may be declining or they may be going up. But overall, in general, housing market prices have started going up since February of 2023. And looks like, or it seems like from the activity and talking to other agents and from reports from other real estate experts and analysts and economists, for the next two or three or four years, prices are heading up. But let me show you some more local charts to see how they compare with the national charts.
I’m going to talk about the local CRMLS. It’s a multiple listing service, which I’m a member of. And that CRMLS covers regions of Orange County, Los Angeles County, San Diego County, Riverside County, Kern County, and some other counties. So it is a huge multiple-listing service. So this data is from there. I’m going to discuss what happened to the medium sales prices in the last one or two years. In the last three years, the medium price per square foot in all of CRMLS, which includes homes, townhomes condos, and co-op and mobile homes. It shows that we had a low in January 2023. The lowest price per square foot in general and on average on these homes in the region was $466 per square foot. As we come closer to February, March, and April, that has gone up to $507 per square foot. Of course, this is the whole region, and like I mentioned earlier, your area hyper-locally may differ, but that’s a general trend. The second chart I’m going to show you is what happens to the selling price versus the asking price.
CRMLS says that the median percentage of the original price received, approximately fall and summer of June 2022, and the median price of the original price received was around 102%, it peaked at 104%. That means if a house was for sale for a million dollars, it sold for a million and $40,000. So that peaked in somewhere around spring of 2022. But as summer came around and fall came around, the list-to-sales price, or the sales-to-list price, was 95%. That means a million-dollar home sold for $950,000. So instead of selling in the spring of 2022 over a million dollars over the asking price, on average, the prices dropped to under the asking price. But if you see that come April 2023, they’re back up to 100%. And of course, all the homes that are pending, a lot of homes pending, and all of MLS are in escrow at over asking price. Like the example I gave you, there are a lot of homes over the asking price. So that’s only going to go up. So the trend is that the listing prices and the sales price, the sales price on average are selling for higher than list price, which indicates an increase in the price on all of CRMLS and potentially all of us.
The next one is the average sales price in the CRM. Let’s go back at approximate fall of 2022, the average sales price in CRMLS, which again includes single-family homes, condos, townhomes manufactured homes, and co-ops, on average, in all these cities that belong to CRMLS, and there’s lots of them, the entire MLS, the average sales price was $970,000. That was a lower point in fall of 2022. If you come back up end of February, or March, that average sales price has gone up to $1.5 million, $1,050,000, and it’s only going to go up. So we see another trend, that the average sales price are going up as well. So the question is, with the higher prices, with the higher inflation, with the higher interest rate, question one is, why are prices going to go up?
Question two is, why are buyers buying? Well, it’s all about supply and demand. People want to buy homes. There’s a demand for homes. Rents are too high. There’s money out there. Despite the fact that people say the economy is slowing down, there’s recession coming along, people have money. There’s a lot of inheritance money coming in to the economy, which nobody talks about. So the number one factor that is providing fire to home prices is inventory. The last three years the inventory or the supply of homes for sale. And this is in the CRMLS. In 2020, there was a supply of almost four months supply, which means that if no homes came on the market back in January of 2020, it would have taken four months to sell all these homes in CRMLS.
In June 2022, that supply was 2.9 months. That means in June of 2022, if no other homes came on the market, and there’s thousands and thousands of homes, almost 80,000 to 90,000 homes for sale, all those would have sold in approximately three months, which is pretty low on average. In March of 2023, there is only 1.8 months of supply, which is very low. Now, just to give you a reference point, in the recession of 2008, back in 2007, I believe the inventory was 10.4 months. That means in the recession of 2008, it would have taken ten months to sell all the homes that were on the market, compared to it’s going to take 1.8 months to sell in CRMLS. So one of the reasons prices keep going to go up and up and up is because of a shortage of inventory. And there is a demand for homes to buy, despite the higher rates, higher inflation rates, and higher home prices.
So if you’re a seller thinking about selling, this may be a good time to sell and possibly buy. And if you’re a buyer, this may be a good time to buy. So if you’re planning on buying or selling, this may be a good time to buy or sell. This quote is from Black Knight, it says, “Just five months ago, prices were declining on a seasonally adjusted month over month basis in 92% of all major US markets. Fast forward to March 2023 and the situation has done a literal 180, with prices now rising in 92% of markets from February of 2023.” While home prices vary by local area, the worst of home price declines is behind us. Good luck on your home-buying or home-selling journey.