Housing prices are expected to drop in some cities of the USA and Canada in 2022. Washington, California ,Chicago and some areas in which housing prices will decrease.

 According to several reports and predictions housing prices in many cities of the USA are expected. Some predictions might not be accurate. 

Reports and expert views:

Mostly,   the selling price of new homes in the United States as of June was $402,100, while the average sales price was $436,800. The average sales price of new homes was $449,100, while the median sales price was $511,401 in May. These numbers were a little lower. However, analysts predict that these price rises won’t last for very long. According to analyst Dennis McGill, who works for Zelman & Associates, property prices will begin to decline by 2023. According to Dennis McGill, director of research at Zelman & Associates, housing prices will decrease, as was anticipated before the change in mortgage rates.  Zelman & Associates predicted a  fall in existing house values in 2023 when they released their housing market estimates in December of last year. McGill stated that  they  raised the drop that they launched with each forecast since then, with reference to the forecasts in March and June. Hence, it is anticipated that by 2023 prices will decrease 4% and in the following year they will reduce to 6%. Along with this drop down of construction prices is also predicted.  The major cause of deflation in housing prices is considered the mortgage rates and also the number of houses is increasing. The drop down in prices has not brought a massive or major change in industry.  According to a report, the national median listing price for single-family houses in June was $450,000, up more than 30 percent from June 2020 and 16. 8 percent from the same time last year. Buyers are starting to leave the market as properties approach the $600k threshold. According to the Mortgage Bankers Association, mortgage applications had their greatest decline in 22 years at the end of June, when they reached their lowest level.

Predictions for the August 2022 housing market are as the economy navigates this moment of uncertainty, several industry experts in the housing industry caution purchasers against trying to timing the market.

Different markets went through a downturn. Another expert, Ben Graboske, reviewed that prices decreased up to 3% in many cities of the USA and by 4 percent in other regions of the world. Even though this was the USA’s steepest cooling on record, Graboske estimated that it would still take six more months for price increases to return to long-term averages. According to his prediction and calculation , it might take around five months for the effects of interest rates to fully appear in housing values Mortgage News Daily reported,  the 30-year fixed mortgage’s average rate went over 6% in June. Although it has subsequently reverted to the lower 5% range, it is still much higher than the 3% range rates that prevailed at the beginning of this year.

Price drops will not adversely affect the  house owner  , because owners have relatively more equity. Home equity levels have gone  higher  as a result of stringent lending standards and several years of rapid price growth. The markets with the steepest price declines were formerly those with the highest prices in the country. The largest decline of any of the top areas occurred in San Jose, California, where average property values dropped by 5. 2 percent during the past two months. That reduced the cost by $74,000.

Situation in the UK: 

In July, UK home prices fell for the first time in a year as high interest rates and rising prices have slowed down. Reduction in prices is expected in upcoming months of 2022. As per  Halifax’s report  prices dropped by 0.1 percent, the first decrease since June 2021, bringing the average price of a home down to $356,100. Although the rate of increase is slowing, values were still 11.7 percent higher than they were a year ago. 

Conclusion:

Housing prices are declining in the USA and some cities in the UK. According to expert views this change is not going to last long and it is not a devastating change for the economy. Hence, buyers should be aware of this situation and they shall take the benefit of the situation.

How long will the housing prices stay down?

As per predictions, for two years there will be a drop in housing prices.

What are the main causes of this scenario?

The mortgage rates have caused this deflation.