By Ali Wolf | Builder
The days of the turbocharged pandemic housing market are behind us as mortgage rates have doubled from 2021 lows, the relocation boom is cooling, and housing monthly payments have pushed beyond reach for many. We are now entering a new phase in the housing market, one that can be described as an impasse. There is a buyer and a seller strike today as both groups are having difficulty reconciling their views on the market.
As a result, new-home sales have fallen dramatically since the start of the year and existing home sales are back to late-2011 levels. The slowdown in sales is both supply and demand related.
To make sense of the current impasse, we put ourselves in the shoes of buyers and sellers to see different factors that are driving their behaviors and explore ways to break the gridlock.
Buyers Strike
From the buyer point of view, confidence and affordability are key factors influencing their decisions. While there are still active shoppers out there, those that have pulled back from the market have done so for a variety of reasons:
- FOBATT. Scars from the Great Financial Crisis are fresh enough that perceived changes in the housing cycle put consumers on high alert. What the Zonda team has observed is that people moved from fear of missing out, or FOMO, earlier this year to fear of buying at the top, or FOBATT, today.
