This is the worst housing market in the U.S.: The reasons why prices have drastically dropped in the last two years
The housing market in the US is suffering a crisis. Here’s the breakdown.
Thanks to Donald Trump’s economics, the US economy is suffering from the one thing that strikes fear into the people whose job it is to keep under control: uncertainty. The housing market is no exception, as it has taken the hit from disastrous decisions coming from the White House.
Deborah Acosta, a Wall Street Journal reporter, described the situation in Cape Coral, Florida, what she calls “the worst housing market in America” in the following way: “prices have tumbled 11% in two years... home prices have declined for 12 of the past 13 months, and more than half the homes have experienced price cuts. Cape Coral also has the most homeowners underwater in the country, with nearly 8% owing more on their mortgages than their homes are worth.”
“Cape Coral is feeling the effects of elevated home prices, ballooning insurance premiums, and property taxes, natural disasters, a return to the office for home workers and a waning demand for investors after a glut of building in the area brought rental prices down.”
Recently, Business Insider published a report that highlighted the stagnation of the housing market, citing numbers from the National Association of Realtors, who revealed that “pending home sales in the US decreased 0.8% from May to June. Year-over-year pending sales dropped 2.8%.”
It added that “the only winners of the current housing market have been homeowners in no rush to sell, who have seen the value of their properties increase significantly in the years since the pandemic.”
Real Estate News wrote that the Federal Reserve’s July 30 decision to hold short-term interest rates steady was ”based primarily on concerns about inflation” and that “the latest data backs up” the decision. Lisa Sturtevant, chief economist at Bright MLS, told the outlet that “the outlook is still unclear" regarding positive signs.
“While inflation expectations remain higher than the Fed’s 2% target, there are growing signs that the labor market is weakening and the statement for the FOMC indicates more concern about a slowing economy,” Sturtevant added before concluding that “As a result, I think it is likely that 2025 will continue to be a ‘stuck’ housing market with both buyers and sellers waiting until 2026 for more certainty.”
“Mortgage applications fell to their lowest level since May, with both purchase and refinance activity declining over the week. There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions,” Joel Kan, MBA’s deputy chief economist, told the outlet.
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Fortune’s Ashley Lutz agrees, writing that “concerns about the economy and job security mean many would-be new purchasers are opting to make do with modest home improvements instead.”
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