House Prices Are Decreasing. Are We Heading For a Burst?


Patrick Iturra, Asset Manager at Estate Investments Group

Housing prices in the United States have been declining for the first time in decades.

You must have heard this multiple times from news channels.

Many people have been involved in panic selling due to this sudden decline.

In the following article, I will share my thoughts about housing prices and what you should do now. There are many reasons to say there will not be any housing bust like 15 years ago.

Many people refer to the current scenario as the 2008 housing crisis. But the picture is quite different this time. Most home buyers will face many challenges, but there are a lot of opportunities for investors. Let us discuss this further in the article.

Housing prices have been declining from June to July. The prices increased in July by 15.8%, whereas the prices were up by 18.1% in June. This difference is 2.3%, one of the biggest one-month cooldowns in history.

One more thing to note is that the prices were up to 39% in the past two years. Also, we can say that the 30-year mortgage rate has jumped from 3.1% to 6.7%.

This is why we witness this rush in real estate, where people want to sell their properties as early as possible.

It is difficult for a first-time home buyer who just shortlisted his dream house last year. Now, he has to pay a down payment on an identical house with interest payments double the previous year.

This has made owning a house difficult for new buyers in the United States.

Two years ago, we witnessed seasonal increases and decreases in pricing. From July to November, people used to buy houses that would be put for sale in the summers.

On the housing website Zillow, there would be a decline in the coming months, where the prices would increase by 1% every year. Also, the price difference would be higher in places such as Austin, Phoenix, Seattle, etc.

Another strategy team at Morgan Stanley housing prices would increase by 3% and then decrease by 3% in July. The decline can start in September or late august.

Economist Laurie Goodman has identified a pattern between the mortgage rate and prices, where the rates increase with a strong economy with housing demand. The costs can become stable in the years with rising inflation and wages.

Prices will also get a lot of support from short supply; she has also claimed that there would be from a million houses to five million places. The current denial rate is 38%, threefold compared to ordinary mortgages. Another critical factor here is the local restrictions that keep low-cost homes away. The majority of people are correct to say that this is the way. People will become this development, but one primary concern is that we do not have the infrastructure to support this.

Wedbush’s Mccanless has given some favorable ratings about the home builders DR Horton, Meritage Homes, and Century Communities; as per him, these builders are in a better position to deliver the houses without any significant delays. He is also optimistic about the market share gains for the manufactured house, as these are assembled in whole and part as factories when they are delivered. Owning such homes is cheap and convenient compared to traditional places where rent payments are made.

One big misconception about manufactured houses was that they were poorly made during the 1960s and 1970s. But, they have improved over time, and these houses are well-built, and the industry is moving quickly.

The Deliveries of manufactured homes have increased by 14%. Also, Maccanless has shared two manufactured house specialists, i.e., CVCO (Cavco Industries) and SKY (Skyline Champion).

I am summing up!

No matter what happens, real estate is one of the most rewarding passive income assets you can invest in.

However, you should invest wisely and choose the property that will generate passive income for you! Now, how do you do that?

If you have any real estate investment inquiries, contact me here! It depends on the selection and market forecasting because not every real estate will be a gold mine. You have to do a lot of research during the process of selection. Therefore, I am here to help you.

I am here to listen to your query and answer with my experience!

“Our investors hire us for one main reason: they want us to prevent the leakage of their significant operating expenses in real estate, contracting, licensing, and facilities management while they focus on their core business, investing.”

We do not sell houses. We grow your assets. Patrick Iturra, Asset Manager at Estate Investments Group.

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Patrick Iturra

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