(The Center Square) — 3 out of the 5 top metropolitan markets across the US at risk of home price decline are in Washington state, according to CoreLogic’s “U.S. Home Price Insights” report.
The report from CoreLogic – an Irvine, California-based corporation providing financial, property, and consumer information, analytics, and business intelligence – highlights April 2022 data.
“The record growth in home prices is a result of a scarcity of for-sale inventory coupled with eager buyers who want to purchase before mortgage rates go higher,” said CoreLogic President and CEO Patrick Dodd in a press release heralding Tuesday’s report. “Most buyers who closed on their home in April had locked in their mortgage rate in February or March when rates were lower than today.”
Dodd doesn’t see growth in home prices continuing.
“With 30-year fixed mortgage rates much higher now, we expect to see waning buyer activity because of eroding affordability,” he said. “Consequently, our forecast projects slowing price growth over the coming year.”
While most housing experts say there won’t be on crash in home prices in 2022, there is an expectation of a pullback due to higher mortgage rates that is likely to put the brakes on buyer demand in the coming months, resulting in a slowdown this year or the next.
That slowdown may be felt in several markets in Western Washington.
The top five metropolitan areas at risk of home price decline in the next 12 months, according to CoreLogic, are: 1) Bremerton-Silverdale, Washington, 2) Lake Havasu City-Kingman, Arizona, 3) Bellingham, Washington, 4) Hartford-West Hartford-East Hartford, Connecticut, and 5) Olympia-Tumwater, Washington.
Selma Hepp, CoreLogic’s deputy chief economist, explained why three of the five markets are in the Evergreen State.
“High risk probability of price decline in the Washington state region is primarily coming from three sources: market overvaluation, the decline in national consumer confidence, and a surge in mortgage interest rates,” she said in an email to The Center Square.
She went on to note, “The metros areas in the Pacific Census region, such as those in Washington state, are relatively more sensitive to consumer confidence and mortgage rates increase than some other regions in the country.”
Hepp elaborated on why that’s the case.
“Based on historical trends, regions in the Pacific Northwest are more sensitive to recession drivers (such as we’ve seen in recent months) but less to overvaluation of the local housing markets,” she said. “In other words, low consumer confidence and a surge in interest rates have historically been more important to the region in determining potential of home price decline. Another critical recession driver is inflation which is at the highest rate in 40 years.”
The bubble is bursting. Dounds like a good thing.
Please folks, do not refinance at this time. You’ll find yourself underwater before you know it.
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