It's impossible to turn on the news without hearing some rhetoric about the impending housing crisis and future recession. It's also easy to feel like this might be happening based on the end of the frenzy. I would argue that everything is relative.
Even as of March of this year, we had year over year increases ranging from 7.4%-45%. Flash forward 6 months later with rate hikes kicking in, and a stock market that has been down for nearly a year and we're still at 18%-30% year over year growth. Nationally, CoreLogic reported that we're up 11.4% year over year for the month of September. This is essentially what the fed has been trying to target. Yes, we still have some significant year over year growth, but it's beginning to slow down. This is exactly what the fed wants.
The reason why this isn't an impending crisis, unemployment is at historically low rates. The expectation is that the fed's rate hikes will increase unemployment. However, in the latest report, job openings actually increased for September. This means that we are navigating affordability. Leading up to the recession, the proportion of income dedicated to housing costs was exceptionally high. We have numbers approaching pre recession rates on the lack of affordability, but we're still 2.3% below that high when adjusted for inflation. In contrast to that market, we're slowing down rather than continuing to inflate beyond comfort and causing a bubble and a pop.
Given our current environment, the Fed still has argument to continue to increase rates like the expected 75 basis point increase for this week. However, hopefully the fed will see the effects of their rate hikes sooner rather than later. The good news is that our local market is more resilient against the fed's efforts just because of the desirability to be in a beautiful coastal community.
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