The qualifying yearly income for a median-priced house in 2020 was $49,680

The qualifying yearly income for a median-priced house in 2020 was $49,680. Now it’s more than $107,000, according to the NAR

Morgan Stanley reverses course on the housing market, seeing a lot more pain ahead for homebuyers.

The current housing market is facing challenges not seen in quite some time, although the exact comparison period varies. Existing home sales have experienced their most significant decline since 2010, during the Great Recession, with a 15% drop in September pushing transactions to a 13-year low. This alarming trend was predicted earlier in the year by Zillow. However, other experts, such as Mark Fleming of First American and Jeseo Park of Bank of America Research, are drawing parallels with the "housing recession" of the 1980s. Morgan Stanley's recent analysis of the market suggests more difficulties for homebuyers, reversing their previous forecast of falling prices due to high mortgage rates and now expecting up to a 5% increase in home prices nationwide.

Zillow, on the other hand, has taken a different stance. After initially forecasting that U.S. home prices had reached their lowest point in February, Zillow economists raised their home price predictions every month until August. At that point, they anticipated a 6.5% increase in home prices over the next 12 months. However, last month, they revised their outlook downward, and they have done so again this month.

Zillow's current prediction is that home prices will increase by 2.1% between September 2023 and September 2024. This is a notable shift from their forecast just last month, which projected a 4.9% increase in home prices between August 2023 and August 2024.

According to Zillow economists, this revision is due to a rare month-over-month dip in home values in September, combined with the continuous rise in mortgage rates. They acknowledge that the resilient labor market is likely to result in an extended period of elevated interest rates, which has contributed to a slowdown in the housing market. Elevated mortgage rates have dissuaded new listings, as homeowners with favorable rates have opted to keep their current homes due to the relatively lower monthly payments they offer.

Read more: https://unusualwhales.com/news/morgan-stanley-reverses-course-on-the-housing-market-seeing-a-lot-more-pain-ahead-for-homebuyers

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