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A 'housing recession' won't bring home prices down, economist says

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Despite talk of a "housing recession," don't hold your breath waiting for home prices to suddenly decline any time soon. In fact, prices are expected to grow through 2023, according to several housing forecasts.

The market does seem to be cooling, however. With higher mortgage costs, U.S. home sales are down over 20% from a year ago. And last month, the median price for an existing home in the U.S. dropped from a record high of $413,800 to $403,800, according to the National Association of Realtors (NAR).

But considering that median home prices have soared by nearly 36% since the pandemic began, a one-month price reduction of around 2.4% can be seen as more of a market adjustment than a significant decline in value. 

Housing prices are still expected to be up 11% for 2022, followed by 2% in 2023, according to NAR's most recent forecast. This follows similar forecasts by Freddie Mac, Fannie Mae and Zillow, which predict positive — albeit slowing — price growth in 2022 and 2023.

And despite the decelerating price growth, median home prices are still up 10.8% from a year ago, according to NAR's data. For context, median home prices have risen by roughly 4.5% a year since 1992, according to Federal Housing Finance Agency data.

“This isn't a recession in home prices. A price decline on a nationwide basis is unlikely.” -Lawrence Yun

"This isn't a recession in home prices," says Lawrence Yun, NAR's chief economist. "A price decline on a nationwide basis is unlikely."

That's because demand for homes remains strong, primarily due to strong employment numbers and an "inadequate" supply of homes.

However, for some local markets that experienced extraordinary price growth in the last couple of years — like in California — a decline in price is possible, says Yun. But "those price drops will be very short in duration," because decreases will be viewed as "a second chance opportunity" by buyers who were previously priced out of the market.

This already seems to be happening in some real estate markets where prices surged during the pandemic. In July, San Jose home prices declined by 4.5%, Phoenix by 2.8%, San Francisco by 2.8% and Austin by 2.7%, according to the latest data provided by Zillow.

That said, "there's nothing to suggest prices will decline in more affordable markets," says Yun. Of course, forecasts don't account for unforeseen events, like geopolitical conflicts or worsening supply chain issues, he adds.

It's possible that home prices could decrease, but "with stabilizing mortgage rates, and some job creation, home prices should also stabilize," Yun says.

Keep reading on CNBC.

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Colorado Springs Real Estate Market Report from August 2022

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As Featured in West + Main Home Magazine: What's Old is New Again

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West + Main agent Laurabelle Vaughn and her husband run a home renovation company called Redbud Restoration in Oklahoma. They are devoted to beautifying neighborhoods and giving new life to older homes while preserving their character.

“This was a complete renovation,” said Laurabelle. “The home is a 1946 bungalow, and it seemed to be nearly all original...if any updating was done it wasn’t within the last 50 years!”

The project involved everything from plumbing and electrical, to framing, drywall, HVAC, and structural plus everything cosmetic.

“We basically gutted the home. The biggest challenge was making the kitchen as functional as possible, and I love that we were able to add both a dedicated dining space and tons of storage, an island with storage and seating, plus a pantry,” said Laurabelle. “Another one of the bigger changes was turning one of the bedrooms into the en-suite bath and walk-in closet for the primary suite. Because that bedroom no longer needed hall access, we were able to expand the guest bath as well.”

Another big improvement that really changed the feel of the home was adding more natural light by converting a window into French doors, building out two egress windows in the basement, and changing two of the exterior doors to full-lite.

“One of the biggest inspirations for this project was the neighborhood. I had several neighbors stop by to check on the project. They loved the home and the previous owner and wanted to make sure the home was renovated with class. So, I was inspired by the challenge of modernizing this home while maintaining the charm and character that everyone loved. I was also inspired by my love for challenging spaces and using space as efficiently as possible.”
— Laurabelle

Above - Before Photos of the Renovation

One of Laurabelle’s favorite things about the project was finding magazines tucked away in the floor joists, some as old as the home itself. She framed a few of them and hung them on the wall in the hallway and used a couple others in the staging.

“One of the neighbors came by to see the home as we were finishing up and was amazed by the renovation. She couldn’t wrap her mind around the new layout and didn’t recognize a lot of the house, but she loved how the project had turned out,” said Laurabelle. “She ended up returning a few times that day to take pictures and to Facetime relatives of the previous owner. She loved that we had kept the original front door

and the super unique fireplace, and she told me stories about coming to pick apples from the tree in the backyard decades ago and said how happy she was to see that the tree was still there. When she saw the magazines I’d saved she started to cry. She loved seeing how much I valued the history of the home.”

All in the details of the home

Laurabelle always starts by measuring the home and hand drawing the floor plans. Then, she marks different designs and layouts using painters tape (i.e. islands, appliances, cabinets, vanities, showers, etc.) to make sure she has the space to include fixtures and storage while maintaining enough clearance to meet city code and provide a comfortable space. Using these measurements, she backs into the size and design of the finishes. The primary bath for example.

“I really wanted two faucets and distinct storage spaces,” said Laurabelle. “I had to find a sink basin, faucets, medicine cabinets, sconces and hardware that would make the space possible, and envision all of this before rough-in even began, so that plumbing and electrical would be located accurately. I chose wall mount faucets to provide more counter space, armed sconces to make sure the medicine cabinets could open, and a basin that was big enough for two faucets but small enough to leave counter space. This part definitely took a lot of planning and marking the walls!”

“I was inspired by the challenge of modernizing this home while maintaining the charm and character that everyone loved.”
— Laurabelle

They spent about $190,000 on the renovation.

“I’ve found that typically labor is about 70% of the cost of projects, so I do what I can myself,” she said. “In this home, the parts I DIYed were: framing the basement, laying the wood flooring, hanging the doors, installing the baseboards/trim and shower doors, some of the tile work, sprinklers and landscape, and digging the egress windows/installing the window wells. I contracted out the parts of the project that required a licensed professional or would have been too time consuming for me to do myself. These are things like plumbing, electrical, HVAC, window installation, drywall, paint, roof and gutters, structural work, fencing, etc.”

Laurabelle thinks the prettiest room in the house is the guest bath.

“The vanity I used was a cheap, plain, black vanity from Wayfair. Adding black hardware really elevated the look. I chose an inexpensive marble tile for the tub surround then tied it all together with a higher-end patterned marble floor tile. As far as use of space, I’m really proud that I was able to turn a 10x10 bedroom into a spacious bath and walk-in closet.”

They did, however, splurge on some of the finishes, including natural stone tile, Pottery Barn medicine cabinets, Kitchenaid appliances, West Elm lighting and ADM flooring, while saving on others, including cement-look ceramic tile, subway tile, Wayfair + Costco vanities, Home Depot cabinets, Target lighting and IKEA cabinets.

“One of the most fun memories was hosting my wedding at this home,” shared Laurabelle. It will always be a part of my husband and I’s story. I loved holding our wedding at a place that I’d put so much hard work into.”

REDBUD RESTORATION

OVERALL BUDGET: $190,000

FIND REDBUD RESTORATION AT

REDBUDRESTORATION.COM @REDBUDRESTORATION


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Ideas to Make the Best of the Bonus Room Above Your Garage

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The bonus room above your garage is often a hidden gem that is overlooked.

This space doesn’t have to be used just for storage. In fact, it is a jackpot of a space that can be used for a variety of fantastic purposes. Here are some ideas for making the most of this bonus room in your home.

Playroom
This is a great area to turn into a playroom for your kids, allowing them their own space for their imaginations to run wild and have fun. Having a designated space for kids' activities also helps keep the rest of the house tidier, so it's a winning situation for everyone.

Home Gym
A home gym is a great way to get in shape and have all of your equipment in one place. Since these areas are typically spacious, there will be plenty of room for different equipment stations and body movement. You'll want to make sure the room has adequate air conditioning and ventilation so you can be comfortable while getting fit. The AC will go a long way in preventing heat exhaustion and dehydration.

Home Office
With many people working from home in the last couple of years, the need for a home office is higher than ever. It is a great way to get away from the hustle and bustle of daily life and focus on work in peace. Plus, you can take advantage of the extra space to spread out your work and even set up a comfortable sitting area where you can meditate, brainstorm ideas or just close your eyes and rest when things are hectic.

Theater Room
For some extra fun in the comfort of your own home, a theater room is the perfect space for movie nights with family and friends. Set up a projector and screen, or even a large television, add some comfy seating and enjoy your very own private theater experience. You can also use this space to play video games or listen to music without disturbing anyone else in the house.

Hobby or Craft Room
If you have specific hobbies that you enjoy, it’s likely that you could use some extra space. For musicians, this could mean setting up a practice space or soundproofing the room for music recording and production. For artists, this could be a studio where you can paint, draw or work on other projects. And for anyone who loves to craft, this is the perfect space to set up a workstation and get creative. No matter what your hobby may be, the bonus room is a great place to pursue it without interrupting family life downstairs.

Home Library
A home library can be a great option for the book lovers out there. If you love to read, this is the perfect space to curl up with a good book. Set up shelves to display your collection and add a comfortable reading chair or two for the ultimate relaxation experience. It could also double as a guest room with the addition of a bed or sleeper sofa.

Even if one of these ideas isn't quite right for you, just remember that the possibilities are endless when it comes to the bonus room above your garage. With a little bit of imagination, you can transform this space into anything you want it to be. So get creative and enjoy your extra living space!

Get more like this on RISMedia.

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Here Are the Bathroom Upgrades Homeowners Made the Most This Year

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Who doesn’t dream of an updated bathroom? From lack of storage to a bathtub you’re hesitant to step into without sandals, renovations that bring bathrooms into the 21st century are high on the list of homeowner wants.

If you’re curious what the most popular bathroom renovations were in the last year, the 2022 Houzz Bathroom Trends Study was just released, and it’s an interesting look at both the trends and the rising price points that took over American bathrooms in 2022.

Sure, everything old is new again. But when it comes to bathrooms, homeowners are looking to ditch features that are outdated. In a survey of more than 2,500 respondents, Houzz determined that outdated style was the top trigger for bathroom renovations in 2022, with 48 percent of those surveyed saying it was their main motivation. More than three-quarters of homeowners (76 percent) upgraded their vanity cabinets during primary bathroom renovations. While 30 percent favored wood for their vanity, 14 percent went with a pop of gray, 7 percent chose blue, and 5 percent went with black.

Shower updates were also consistently popular, up two percentage points over the previous year with 84 percent. The survey determined that when removing a bathtub, nearly four in five homeowners enlarge the shower. And of course, the toilet is often a big focus. One interesting (but not so surprising) fact? High-tech toilets proved to be quite the draw for homeowners. Nearly two in five homeowners add high-tech features to their toilets, choosing bidets, self-cleaning elements, heated seats and built-in night lights.
“Bathrooms have always been a top room to renovate and we’re seeing that homeowners driven both by aesthetic desires and functional necessities, are doubling down on their investment in these private sanctuaries,” said Marine Sargsyan, Houzz staff economist. “While the cost of products and materials has increased due to inflation and supply chain disruptions, renovation activity remains strong, propped up by high home equity and homeowners’ desire to stay put given limited housing supply.”

As you’ve likely discovered while plotting out your home improvements, bathroom renovations are pricey. From buying the materials to finding the necessary labor to complete the work, it can be quite the expensive pursuit. The survey determined that the national median spend for primary bathroom projects increased nearly 13 percent to $9,000. For higher-budget projects, the average spend saw a 19 percent jump to $35,000. People doing “major” bathroom renovations (think full-on shower upgrades) spent a whopping three times more on their renovations than those undergoing minor renovations.

Another interesting point is the rising popularity of adding greenery to bathrooms. 88 percent of respondents said adding greenery “adds to the aesthetics of the room,” while 64 percent said it creates a more calming environment. 34 percent attributed the increase to plants’ air purification powers, while 7 percent like their odor-fighting ability. Another 7 percent went with antibacterial attributes.

Keep reading on Apartment Therapy.

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