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Housing market could slow in a few markets over the next 12 months

Housing
Posted at 12:04 PM, Apr 01, 2022
and last updated 2022-04-01 14:24:29-04

KALAMAZOO, Mich — If you're a buyer in the U.S. looking for a good deal on a new home, things aren't looking great.

"Currently there are no markets where home prices are declining," said Selma Hepp, the deputy chief economist with CoreLogic company.

They identified 13 markets where prices have a greater than 50% chance of falling over the next 12 months — four on the West Coast, two in Arizona, four in the Northeast, and three in Michigan.

"We look at a number of characteristics. One is income change, employment change, or expected employment change, there is debt to income ratio, there is new construction, percent of distressed sales, income change" said Hepp.

Kalamazoo, Michigan is one of those markets. So I came out to see what is it about this market that we all can learn from.

"It's been a hot market here so houses have been flying off the market here in a couple of days and it's been really low inventory. At one time we don't have a lot of houses on the market, so buyers are really having to compete with each other," said Ashley Sayles, a real estate agent in Kalamazoo.

Right now, she says the market is hot, but the report indicates a change.

"We still have a really low inventory. We still don't have a lot of houses on the market and even with interest rates rising a little bit right now, that doesn't solve our inventory problem," said Sayles.

But I asked Selma to look at Kalamazoo specifically. She identified key numbers that any of us can watch for in our areas.

"It seems like income growth compared to other areas may be a little bit slower, a little bit higher unemployment rate, there's been a lot of home price growth recently so it may be peaking that affordability ceiling, and maybe a little bit more debt for existing residents there," said Hepp.

So Hepp's point is Kalamazoo and these other 12 markets are at a higher risk of housing price decline than anywhere else in the country. But that isn't much comfort for home buyers looking for a house today.