13 Reasons The Housing Market Remains Strong

First, with empathy.  It is scary.  We’ve seen home prices escalate 44% with intense buyer bidding, insatiable demand, and limited supply.  Then saw it turn on a dime as interest rates spiked.  Now as home prices “fall”; buyers are tempted into waiting for the bottom. While they are waiting inflation numbers are starting to soften, the Fed is starting to near it’s peak, the economy shows signs of slowing.  All of this to say, a recession is coming.  Recessions bring lower inflation, lower mortgage rates, and higher home prices.

Especially this one.  Because this upcoming economic recession and the housing recession we are in, isn’t due to credit deterioration (like it was in 2006-2008), it’s about affordability.  Affordability which will loosen a little as rates settle back down.

After lots of empathy, you need to be armed with facts.  Facts which help assess the real risk.  How stable are jobs, credit, households? Will homes go into foreclosure dropping prices and toppling the market? The short answer is.. American’s are strong financially and home equity protected.  The longer answer.. is in the 13 facts below.

Here are some ditties to support your next conversation:

1.    38% of all homes are paid off nationwide (Per US Census Bureau).  In Colorado it is 29.2% or one out of every 3.5 homes are owned free and clear per CDOLA.

2.    Another 26% of homes purchased in October were paid in full with cash. Those purchased with a mortgage had a credit score of 723

3.    October 2022, Colorado made the “bottom 5” states with a 2.05% 30 day mortgage delinquency rate, less than 0.5% off the all time record low. (Blackknight Mortgage Monitor)

4.    2.91% of all homes with a mortgage nationwide are in delinquency. (Blackknight)

5.    0.35% of all homes are in foreclosure nationwide

6.    Americans are still sitting on $1.7T excess cash (Axios) supporting a strong economy

7.    NAR lists the current inventory at 1.22 million, still below 2019 and half the historical normal of 2 million to 2.5 million.

8.    77% of older adults want to age in place (AARP)… reverse mortgages will continue to let them and put pressure on limited inventory

9.    Redfin continues to show strong investment purchase numbers.. . 17.5% all purchases in Q3 ’22.. showing their hold on inventory.  This is down from 19.5% showing “investors pulling back”.. however, it is still up from the 15% pre-pandemic.

10. 86% of all mortgages are locked Under 5%; 65% are locked under 4%. Keeping sellers (i.e. would be buyers) locked into their homes with low rates and low mortgage payments; again.. keeping inventory low.  In Colorado.. 91.8% of our homes are locked in UNDER 5%! WOW