Zillow: Housing market sees 2 shifts after SVB

The new one collapse of Silicon Valley Bank sent shockwaves through the real estate industry as builders and agents alike scrambled to understand what mortgage rates and the economy at large meant.

on an article published on Tuesday, Zillow Chief economist Skylar Olsen gave two predictions for how the shutdown will turn out Silicon Valley Bank could affect the US housing market in 2023.

Let’s see.

1. It will push mortgage rates down

The first prediction is that mortgage rates may fall if the Federal Reserve backs off from future rate hikes, which Written by Olsen “Seems like it’s been almost weeks.”

Already, the financial markets are pushed the average 30-year fixed mortgage rate to 6.75%—down from last week’s high of 7.05%. If the Fed does not issue a rate hike in March, some analysts think mortgage rates will sink further.

“Homebuyers have responded very well to mortgage rates in recent months; when rates rose back above 7% earlier this month, it halted the momentum that had been building as rates originally fell at the start of the year. Now, lower mortgage rates could thaw what has been a relatively frozen spring home buying season,” Olsen wrote. “For buyers buying now – especially in price-sensitive areas – a continued rate drop could be a welcome boost to affordability, but they still need to plan for rate volatility.”

That said, if the collapse of Silicon Valley Bank warns of an impending 2023 recession, Written by Olsen the affordability gains from lower mortgage rates can be extinguished by economic pain.

“Lower prices will help homebuyers a little more when it comes to affordability, but if SVB’s troubles are indicative of larger issues, the coming recession could be deeper and longer than expected. That raises the possibilities that income or job losses may begin to affect housing markets where economic stress is concentrated, ” Olsen wrote.

2. Tech hubs should brace for more pain in the wake of the Silicon Valley Bank collapse

The fall of Silicon Valley Bank, Olsen predicted, could mean more Pain awaits in tech-dominated housing markets like San Francisco, Boise, and Seattle. These high-cost Western markets have already heavily impacted by the Fed’s ongoing inflation battleand the collapse of Silicon Valley Bank could exacerbate existing challenges.

As Olsen says, “A widespread tech downturn can be felt in housing markets like the San Francisco Bay Area and Seattle, where tech jobs and stock prices have a big impact. With fewer home buyers in these markets able to afford the high prices that have been supported for years by high incomes and stock growth, it is likely that these markets will cool and prices will fall.

For buyers and sellers in these markets in Western tech hubs, as well as across the US more broadly, the coming months are likely to be challenging.

While lower mortgage rates may provide a welcome boost to affordability in the short term, longer-term risks related to broader economic issues cannot be ignored. as Olsen advises“Buyers now should be looking to put down roots and find a home they want to keep for at least the next few years if it takes time to build equity.”

Finally, the fallout from the SVB collapse serves as a reminder that the housing market is not immune to broader economic changes and challenges. As buyers and sellers navigate this rapidly evolving landscape, careful planning and a long-term perspective are essential.

Want to stay updated on housing market? Follow me Twitter on @NewsLambert.

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