Sixty percent of 100 economists and housing market experts surveyed by Zillow Group Inc. (Nasdaq: ZG) said they do not think the U.S. housing market is in a bubble, according to a report published June 7. After two years of a historic seller’s market in Central Florida and across the country, it’s an open question about what happens to the residential real estate sector as interest rates rise and sky-high prices put homeownership increasingly out of reach for many.
Nationwide, more home sellers are cutting their asking prices than at any point since 2019, Redfin Corp. (Nasdaq: RDFN) reported. This is a sign of a slowing housing market, Redfin Chief Economist Daryl Fairweather said in the report.
“The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates.”
Still, the majority of the experts surveyed said they don’t believe a housing market crash is on the horizon, with some of the most common rationales being low home inventory, increased demand for single-family houses and improved lending practices compared to the mid-2000s.
On the other hand, 32% of the experts said the U.S. housing market is in a bubble. Meanwhile, the majority of the experts (67.8%) said they expect a U.S. recession to begin sometime between July 2022-December 2023.
Whether or not the housing market ends up a bubble similar to the one that popped 15 years ago has big implications for home sales and values in Central Florida. For example, metro Orlando home prices consistently dropped 30% or more year-over-year throughout 2009, while home sales cratered 40%-50% year-over-year throughout 2007 and 2008.
Many real estate agents on the ground see a market that has slowed when compared to a year ago, but still is active. Deanna Armel, CEO of Kissimmee-based Armel Real Estate Inc., said properties that once drew 25 offers now draw five.
Still, the right house can create a frenzy amid a housing shortage in Central Florida, she added. “If one great house comes on to the market, there’s going to be 100 offers. The houses that are getting plenty of offers are updated, renovated, and turn-key. Others are giving people pause.”
