The Escape Home: Is the housing market really crashing? Redfin’s chief economist shares her predictions

by | Sep 16, 2022 | Stock Market

This article is reprinted by permission from The Escape Home, a newsletter for second homeowners and those who want to be. Subscribe here. © 2022. All rights reserved.  Inflation is high and interest rates keep rising, leading to a lot of speculation about the housing market, with many throwing around the word “crash.” This week, The Escape Home’s Danielle Hyams checked in with Redfin chief economist Daryl Fairweather to get a pulse on what exactly is going on.  EH: What is the effect of higher interest rates on prices and demand? 

Fairweather: Interest rates have really cut into demand. The median monthly mortgage payment on a home is almost 40% higher than what it was a year ago, so that just really cuts into buyer’s budgets, it’s why we’ve seen a slow down in prices, demand and sales.  EH: Does that mean it could be shifting from a seller’s market to a buyer’s market? Fairweather: If you have gotten to the point where you have been approved for a mortgage and there are homes within your budget that you see on the market, then I think you do have the upperhand, it’s just harder now for people to get to that point. EH: Have you seen any effect from the tight labor market on housing? Fairweather: It helps people move. So one thing that’s happening is the most expensive housing markets have seen people leave. Places like the Bay Area and Los Angeles — not so much New York, New York is a different picture — but those expensive west coast markets have a stark decline, especially for $1 million + listings. Since people are priced out of those million-dollar-plus areas, they’re packing up and moving somewher …

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