The shifting market will slow prices down — but won't stop them cold

It’s Wednesday June 8, and today Inman reporter Jim Dalrymple II continues his reporting on the shifting real estate market, this time by talking to Redfin economist Taylor Marr, who sees a slowing market ahead — but not price drops. Does that augur the return of the so-called balanced market of yore?

The shifting market will slow prices down —?but won’t stop them cold

THE NEWS: What’s going on with home prices right now? Though the real estate industry has been collectively holding its breath since the coronavirus pandemic started more than two years ago, a consensus has emerged this spring that the market is changing. Economists are seeing a shift. So is Gary Keller. Fannie Mae is predicting a recession. And mortgage rates are suddenly higher than they were just months ago.

The result is growing pressure on home prices. And though it’s still relatively early days in this story, two things are clear: First, home prices are still rising. They haven’t collapsed, and are not expected to in the near future. But second, sellers are losing some of their advantage and are having to reduce what they’re asking. That doesn’t mean prices are dropping, but it does suggest price growth will slow down and a more balanced market may return.

BEHIND THE NEWS: Like many other economists who have spoken with Inman in recent days, Redfin Deputy Chief Economist Taylor Marr does not believe there is a housing bubble on the horizon. He attributed recent price gains in the housing market to the strength of the sector’s fundamentals, and he believes mortgage rates are likely to stabilize and not rise significantly beyond their current levels. The overall result is that nationally home price growth may cease to make the double digit percentage gains that have dominated the last two years.

However, Marr does not think that overall the U.S. housing market is likely to see price drops. Still, some specific markets could buck that trend and see price declines. Marr pointed to places, such as Boise, Idaho, and Austin, Texas, where home prices have grown far higher and more quickly than in other cities. Read the full story.

>> NUMBER OF THE DAY: 60% of experts think today’s housing prices aren’t decoupled from market fundamentals, according to a new Zillow survey <<

iBuyers, Power Buyers saw explosive growth in 2021. What about 2022?

THE NEWS: A new report shows that despite the last year’s highly competitive market, both iBuyers and Power Buyers have managed to significantly extend their reach across the U.S. housing landscape.

The report — from iBuying marketplace zavvie — notes that in the first quarter of this year iBuyers did almost twice as many purchases as they did in the first quarter of 2021. The report also points out that Opendoor and Offerpad — the two largest iBuyers — were both profitable in the first quarter of this year. And the report reveals that, according to a recent survey, “over 80 percent of sellers said they would react positively to receiving a cash offer on their house from a credible company.”

BEHIND THE NEWS: Though the sector did have a strong 2021, the report shows that iBuyers’ average purchase prices peaked in the third quarter of last year, and have been declining since. The report attributes this trend in part to the end of Zillow Offers, which the portal giant announced in November. Read the full story.