According to the National Association of Realtors, 90% of U.S. metro areas saw house prices increase in Q4 2022, with around 1 in 10 markets experiencing a price decline. The national median single-family existing-home price went up 4% in the year to Q4, settling at $378,700.
Almost 20% of 186 metro areas reported double-digit price gains. Out of the 10 metro areas with the largest annual price increases, four were located in the sunny state of Florida. These included North Port-Sarasota-Bradenton, Naples-Immokalee-Marco Island, Punta Gorda and Deltona-Daytona Beach-Ormond Beach.
Florida has been in the spotlight for bucking U.S. house price trends in recent months—with Miami, in particular, storming ahead. The city saw its second-best sales year in 2022, along with 11 years of consecutive house price growth, the longest-running streak on record. Miami also boasts the fastest-rising rental prices in the country, followed by Orlando. Experts are predicting that Miami will be one of the few cities to escape a home price correction in 2023, with prices set to rise 0.8% this year.
Metro areas in California on the west coast dominate the country’s top 10 most expensive markets. The area has long been a hugely popular place to live, particularly amongst young professionals, due to its sunny climate, world-class cities, vibrant social scene and plentiful employment opportunities.
The most expensive place to buy a home is San Jose-Sunnyvale-Santa Clara, California, where the average property will set you back $1,577,500.
Expensive neighbourhoods are the most likely to see double-digit price falls, as people move to more affordable areas and the demand for homes declines.
Affordability is a factor at the forefront of buyers’ minds, given rising inflation and the cost-of-living crisis. Mortgage rates were at an all-time high of 7.08% last fall. Monthly mortgage payments rose by around 7% in Q4 compared to the previous quarter, and right now, 30-year fixed rates have been recorded at 6.32% (Freddie Mac).
Mortgage Bankers Association (MBA):
Long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.
Meanwhile, house prices have risen by 42% in the last three years and are rising faster than both wages and the rate of inflation. This is putting pressure on new home buyers and buying a house is becoming increasingly unaffordable.
In light of falling demand, the slowdown in house price growth from Q3 to Q4 is unsurprising. However, experts are predicting that prices will remain stable due to restricted supply—and so far growth remains positive.
It is looking like the rate of inflation has passed its peak in the U.S. and is finally on its way back down. With this, it is hoped that record-high mortgage rates will decline and attract more buyers to the market in the coming months.
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