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Key Real Estate Market Highlights From Jan 31 – Feb 7, 2023

  • The Bureau of Labor and Statistics released the January jobs report on Friday
    • Total employment rose by 517,000 
    • Unemployment fell yet again, from 3.5% to 3.4%
    • This is the lowest unemployment we’ve had since 1969!
  • After dropping to 5.99% late last week, the 30 year fixed rate mortgage hiked 20 basis points to 6.39%, the highest level we’ve seen in a month
    • For perspective, the 15 year fixed rate mortgage is up 15 basis points to 5.45%
  • Based on the latest Housing Market and Equity Trends, Black Knight estimates that annual home price gains could turn negative in the next three months

Real Estate Market Highlights: A Deeper Dive

The Fed has been keeping interest rates high in an effort to battle inflation. However, the swimming jobs report that came out last Friday reinforced their confidence in the economy. In response, they raised the rates again. This balancing act between preventing running inflation and the slowing of the economy is likely to continue into 2023. And the real estate industry is going to feel its ripple effects every time.

Black Knight’s latest Mortgage Monitor report documents a continuation of home price growth rate declines for the sixth straight month. In December, it was down 5.0%, which is the lowest it’s been since June of 2020. This means that we are currently on a trajectory where annual home price growth rate will turn negative within three months.

Black Knight Home Price Index as an indicator in real estate market highlights for the week

Of course, different markets have been impacted differently. 28% of the country’s largest real estate markets have seen home price declines above 6%. In fact, San Francisco, San Jose, Seattle, and Phoenix have experienced declines greater than 10% on a seasonally adjusted basis. Of the top 50 markets today, only four have seen prices rise on a seasonally adjusted basis: Kansas City, Indianapolis, Virginia Beach, and Louisville. 

Black Knight median home price chart as an indicator in this week's real estate market highlights

A decline in home prices naturally means a decline in home equity. According to the same Black Knight report, homeowners across the US have lost $2.3 trillion or 13% in equity over the last six months. As such, tappable equity has fallen by $1.8 trillion or 15%. Tappable equity is the home equity that you can borrow against while maintaining at least 20% in the home. This brings our tappable home equity levels down 1% YOY, which is the first decline we’ve seen since 2012. 

black knight's home equity chart as a real estate market indicator

What this means for real estate professionals

Despite last week’s optimism for a market recovery, real estate is likely to continue to experience bumps in the road. Homeowners who have tight margins and experience a change in life circumstances may end up needing to sell their homes. Meanwhile, others who would otherwise be ready for a move may hold out for a better deal. As we continue on our trajectory, 2023 is likely to present once-in-a-lifetime deals for buyers with the means to invest.

Overall, with inventory low, builders unable to meet market demand, and lending standards remaining strict, we aren’t anticipating a strong market correction. However, a market shift is undeniably here and it’s here to stay. We’ve written an article featuring our top strategies for thriving in a down market, which you should check out below. 

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