The housing market is facing significant challenges due to a combination of high prices, rising interest rates, and low inventory.

Price Changes: Expensive homes, above $1 million, are selling well, while homes below $750,000 are struggling.

California and Seattle metros have seen the highest monthly home value growth, driven by tech companies and a lack of inventory.

Southern metros, including Florida and Texas, have experienced subdued appreciation due to increased inventory from new construction.

New Orleans and San Antonio have seen a decline in home values, and other Texas and Florida markets have seen modest growth.

Inventory: New construction is providing relief in some markets, particularly in Texas and Florida, by giving buyers more options.

Total inventory has increased year-over-year, but it remains lower than pre-pandemic levels in most areas.

San Jose, Dallas, and Tampa are seeing the most new listings, while New York City, Las Vegas, and Boston are experiencing the largest declines.

Competition: Bidding wars and waived contingencies are still common in some markets, particularly on the West Coast.

In other areas, buyers have more negotiating power due to increased inventory.

Affordability: Mortgage payments have increased significantly due to rising interest rates, making housing unaffordable for many buyers.

Home values now exceed pre-pandemic levels in most metros, creating a higher price-to-income ratio than during the 2008 financial crisis.

Rental Market: Rents have increased by 6% month-over-month, driven by increased demand and a shortage of supply.

Only one major metro area, Pittsburgh, has seen a decline in rents on a monthly basis.

Outlook: The market is divided, with some areas facing continued price growth while others experience declines.

Until inventory levels improve and interest rates stabilize, affordability will remain a challenge for homebuyers.

The Federal Reserve predicts continued high mortgage rates throughout 2024, further limiting affordability.

Price Disparities in the Housing Market: High-End vs.

Low-End Properties

While homes above $1 million are witnessing strong sales, homes below $750,000 are facing challenges.

This disparity emphasizes the contrasting market dynamics for luxury properties and those targeting first-time homebuyers or individuals with lower budgets.

Inventory Challenges and Geographic Variations in the Market

New construction in Texas and Florida is adding to inventory, while some areas, like San Jose, are seeing an uptick in new listings.

Conversely, major cities like New York City are experiencing significant declines in inventory.

These regional discrepancies impact housing availability and market dynamics.

Housing Affordability Remains a Critical Issue

Rising interest rates and increased home values have made mortgages significantly costlier.

As a result, homeownership has become less affordable for many potential buyers.

The elevated price-to-income ratio echoes concerns from the 2008 financial crisis, underscoring the affordability challenges that the market faces.