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Power up the flux capacitor, climb aboard your DeLorean and prepare to travel back to 2008 because recent headlines concerning a real estate market crash seem very familiar.
The main differences between today’s imploding market and that of 17 years ago were that in ’08, bad mortgages and over-inflated house prices were the issue. Today, high interest rates, soaring insurance costs, economic fears, and stubborn inflation are the primary problems. The results, however, are pretty similar — much of the U.S. is becoming a buyer’s market, according to a recent report by Redfin (NASDAQ:RDFN).
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The numbers are shocking. In April, 56,000 home purchase contracts were canceled — just over 14% of all pending transactions, Redfin reports. Not since the early days of the pandemic have so many deals failed to get to the finish line.
“We see a lot of deals collapsing, especially in major markets like Las Vegas and Phoenix,’ Joel Efosa, the CEO of Fire Cash Buyer, told the Daily Mail.” It’s especially first-time buyers. Some are losing their jobs, others simply no longer qualify for loans because they don’t make enough or have good credit.” He noted: “Realtors are asking sellers to accept the truth — the market is crashing before our eyes.”
Prices have fallen year-over-year from April to the same time last year in 20 major metro areas, Zillow’s Home Value Index shows. Most of the declines have occurred in Sunbelt states, such as Arizona, Texas, Florida, and Louisiana, which have followed a similar pattern to 2008.
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However, Zillow reports that the Northeast has yet to tip into a buyer’s market, where sellers still have the upper hand in cities like Buffalo, New York; Boston; Hartford, Connecticut; and Providence, Rhode Island. In these markets, there are at least 10 engaged home shoppers for every listed home.
The ongoing discussion of tariffs and increasing concerns about higher prices for food, furniture, construction, cars, and more are keeping potential buyers on the sidelines.
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