Updated: Mar 1
Is the red hot housing market finally cooling down? According to recent data, the answer is a resounding yes. While home prices are still high, the total value of homes in the market has decreased by 5%, or $2.3 trillion dollars, which is the biggest drop in percentage terms since the 2008 housing crisis.
For home buyers, this is good news as the higher mortgage rates and less competition in the market have taken some of the pressure off. The median sales price has dropped to $383,000, down from its peak in May, making it slightly easier for those looking to buy a home.
However, not all homeowners have suffered the same loss. The biggest declines were seen in expensive cities like San Francisco, San Jose, Oakland, California, and New York. Meanwhile, pandemic boom towns like Florida, Tennessee, and South Carolina saw an annual gain of 17% last year.
But it's not just home sales that have been affected. During the pandemic, the Home Improvement sector boomed as well. However, demand has weakened, and Google searches for discretionary Home Improvement projects are moving towards pre-pandemic levels. This shift can be seen in the decreased interest in kitchen and bathroom remodeling projects, down by 15% to 28% so far this year compared to those looking for replacement projects like roofing and siding.
Even Home Depot, a major player in the Home Improvement industry, has seen a moderation in demand. Customers are spending less, swapping out product quality to stay within budget, and becoming more price-sensitive.
So, what does all of this mean for the future of the housing market and Home Improvement industry? While the housing market has seen a downturn, it's important to remember that home prices are not collapsing. Homeowners who bought in expensive cities have suffered the most significant loss, while those in pandemic boom towns are seeing some return on their investment.
As for Home Improvement, while demand has moderated, it remains to be seen how it will fare in the face of elevated inflation. Will homeowners continue to invest in their homes, or will they hold back as prices rise? Only time will tell.
In conclusion, the housing market has finally cooled down, and it's important for home buyers and homeowners to pay attention to the data and trends. While it may be easier to buy a home now, it's still important to do your due diligence and make an informed decision. As for Home Improvement, it's important to remain cautious and keep an eye on inflation rates to make sure that any investments made in your home are worth it in the long run.