U.S. Housing Market Sees Biggest Drop Since 2008 | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Brittany Raymer.

    After the last couple of years have seen sky rocking home prices, the U.S. housing market just had its biggest drop since 2008, when the Great Recession first began. This raises some additional fears that economic instability is on the way.

    Redfin is reporting that U.S. home values fell from $47.7 trillion in June 2022 to $43.3 trillion by the end of the year. That's a decrease of 4.9%. That's just a little less than 2008, when the housing market collapsed, and values cratered to 5.8%.

    It seems like in many ways, history is repeating itself.

    In the 1970s, souring inflation led to a similar housing boon, which was halted as the fed kept raising the interest rate. The country is once again dealing with inflation and was flushed with cash after stimulus packages came during the COVID-19 pandemic. Exceptionally low interest rates also helped.

    Now, as interest rates have climbed to 6.5%, and some families are putting off buying their dream home.

    While that's a disappointment, it might be a boon to others. Families that have the capital to move will find a much more forgiving housing market, in terms of prices and competition.

    But so far, this change isn't impacting the North Carolina yet, which is ranked 2nd in terms of biggest increase in housing prices.

    Here sellers are still seeing 21% higher profits from 2021 and 78% higher profits since 2022. Raleigh in particular has also been ranked as the second highest when it comes to median home price increases, at 17.9%. Only Tampa is higher at 21.9%. Raleigh is also low when it comes to lender-purchase foreclosures in 2022.

    Hopefully, this tempering of housing prices will hopefully make it easier for some to purchase a home. In the last couple of years, competition has been so fierce that people are offering far and above the asking price of homes in order to secure it. Unfortunately, as the market dips, some are seeing their house perhaps lose value and leave them at risk of default if a recession occurs.