Not too long ago I sent out a local residential market. This month, let’s talk about what’s happening nationally. No one has a crystal ball, but as I’ve listened to various professionals (local and national), here are some conclusions I want to share. I say all this with the caveat that artificial interference in the normal market ebbs and flows can throw all of this out of wack. Here it goes!
We should finish the year down about 20% in overall sales nationwide, from approximately 5 million units sold last year, to around 4.2 million by the end of this year. A large contributor to the slow in sales is those higher interest rates everyone talks about. The rate impacts the buyer, sure, but it’s also creating a huge lag in resale homes. Buyers who locked in at low 2%, 3%, 4% rates several years ago aren’t willing to move frivolously due to the higher rates. It typically requires a life changing event (birth of a child, new job, death, marriage, etc) to cause a seller with a low rate to move. That is a change from the pre-covid years.
Overall, the prediction is for rates to cool down to the mid-5%, low 6% range toward the end of this year and beginning of the next. With that, we should see a bit more of the resale market come back and it’ll encourage buyers who are on the fence to take the plunge as houses become more affordable.
What else is coming? The Millennials! Say what you will about my demographic, but we are about to take the buying market by storm. This large cohort of buyers is entering the traditional “first time homebuyer” age range and they are chomping at the bit to buy. Depending on life circumstances, many of this age group have been stuck in the rental cycle for longer than normal. An influx of new construction homes are on the way to help meet this pent up demand. Couple that with the predicted lower interest rates, and this group may finally achieve their home ownership dreams very soon.
Is a housing market crash coming? All signs point to “no” at this point. I loved these stats from Keeping Current Matters.
-39% of homeowners own their home free and clear
-29% of mortgaged homes have more than 50% equity
-32% of homes had less than 50% equity
That means 68% of homeowners have at least 50% equity in their homes! That is incredible. It also means, in my opinion, that a crash is highly unlikely. Most people will liquidate the asset and leave with money in their pocket before they’ll experience foreclosure. And hey, 39% of them never have to worry about foreclosure anyway, since they have no mortgage. You 39 percenters are GOALS!!
So there are your magical predictions for what’s to come. I am 100% not an economist. Don’t make life altering decisions based on this data. I care about you and those you love, and I want you to be kept in the loop. Use this information to have educated conversations with friends and family. If you have thoughts on what’s to come, text me your predictions, email me your links, or call me with your data! I love hearing from you.
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P.S. If you’ve got about 3 minutes, I’d love to receive a written review from you on my Zillow profile. In the last two years I have totally failed to ask for reviews (insert ‘face palm’ emoji here). The number of reviews an agent has can make or break someone’s decision to use that agent to buy or sell. If you want to make this a competition, I’m currently in 5th place for the most reviews in my company. I’m 23 reviews behind first place. I’d love to change that with your help! You can scan the QR code or go to http://bit.ly/HollyZillowReview to shoot me a quick review.
Open your smartphone camera or QR code scanning app. Hover your camera over the image and a link should appear. Click the link and voila!
As always, thank you for your time in reading this, your business, your feedback and your referrals. Until next month…
Your Realtor,
Holly Douglas, REALTOR®
864-992-7820
HollyDouglas.Realtor@gmail.com
P.S. I’m never too busy for your referrals!