Economy, Market Watch and Pricing, OH MY!
After meeting with my company over local, state and national data on the market,
I wanted to share some stats with you on the current and varying economists opinion -
“Much of the rapid increase in rates is behind us.” - Mark Fleming, chief economist at First American
Big banks are predicting a price fall, but their clients are developers, investors, commercial. The audience is a little different than a residential audience.
“For those bearish folks eagerly awaiting the home price crash, you will have to keep waiting. As much as demand is pulling back, supply is as well reducing downward pressure on prices in the short run”. Taylor Marr, Deputy Chief Economist, Redfin
Freddie Mac forecasts small increases and small decreases. Fear being the huge determination driving buyer and seller behavior.
What I am seeing and understanding is this will not be a housing crash or anything similar to the housing crash from 2008 through 2011. Prices may rise and dip a little bit, and especially during the winter months per the usual, which lends better negotiations for Buyers. Sellers typically take homes off of the market during the holidays, to re-list in spring when pricing is better. But, depending on when they purchased, they would still do quite well to sell. Though, it would be a bit painful to let go of a 2% or 1.75% rate.
Recessions in the 80s show us that home prices still went up
1991, there was a small decrease at 1.9%
2008 recession was a large fall at 19.7% - but keep in mind that this was a housing crash brought on by sketchy lending practices resulting in people buying more house than they could afford.
2020 Pandemic dip was a small pause in increases due to overall pandemic economic fears. Prices went up drastically from there
This is not a housing crash, as far as I or my colleagues can tell. The right time to buy residential real estate is when you have prepared, saved, found a city or area that you desire to live in, have found the right property for you in the right neighborhood that checks your personal boxes. Inventory is still very low - currently at 2.5 months. A balanced market is 6 months of inventory. Buying at higher interest rates is still a great time to buy with a refinance option available in the future, and not too far off. Rates will decrease in a recession, and not necessarily home prices. When you find the right property for your needs, that is the best time to purchase. We can look and speculate endlessly, causing a buyer paralysis, which can lead to regrets - a buyer missing out on that perfect house due to pause.
For business flippers, a wait can be necessary to watch the market a bit, but we are not expecting a big fall like we saw in 2008. With small ups and downs for an overall rise in prices, a longer game for a flip is good to keep in mind. A couple of years might be the perfect amount of time to remodel and flip a home, which falls in line with capital gains as well. I can recall clearly in 2016 when prices were up, how nervous flippers were to purchase what felt like already high prices at the time. In retrospect, it was a near perfect time to buy.
Call or email me to go over current market data. Let's go see that house you have your eye on! Might as well as I am usually out there viewing the inventory weekly, looking for "the one" for my clients!