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Is it safe to buy in 2023?

Trying to time this market is like trying to catch a falling knife. I’ve advised against that for the past decade, not only because it’s stressful and likely to cause bleeding, but because I like to focus (and direct my clients’ focus) on things we can control.

Instead of fighting the Fed…

So many are focused on whether they hike or cut or pause their rate hiking campaign. I don’t know what they will do but I can tell you sometimes when they hike, mortgage interest rates improve. Why? Because there are many factors influencing the supply and demand of mortgage bonds, which are what actually move mortgage interest rates. Many are also obsessing about a recession vs a “soft landing.” I can tell you when they will call this a full blown recession and that is when the labor market can no longer be disguised as strong. I can also tell you that mortgage interest rates fall during recessions. What I can’t tell you is when that is going to happen so that you could time your home purchase accordingly.

What can you tell us Shivani?!

To focus on what you can control. Which is your personal economy, rather than the shitstorm that is our national economy. Sure they impact each other but let’s try to keep this a bit more narrow and productive. Plus if things are getting tricky for the nation as a whole, it’s a great time to make sure your own shit is in line. Americans just passed a trillion dollars in credit card debt. A lot of which is being blamed on Millennials. Some if it is just numbers, we are the largest generation in history so that alone would mean we are contributing to a lot of the data on any topic. Millennials do enjoy experiences though and spend a lot of money on those and less on saving. I learned this week that 56% of Americans can’t cover a $1,000 emergency from their savings, they would have to use a credit card. Which makes me feel kind of dumb about trying to help them afford a couple hundred thousand dollar house but…Rome wasn’t built in a day, I guess.

Real estate is its own separate economy.

So let’s assess it as an asset class. We have gone over, ad nauseum, how a housing crash is not mathematically possible in the near future. The loan quality is excellent, and Americans are sitting on almost $30 trillion in home equity – two factors that would discourage mass defaults on mortgages. The supply of homes is low in comparison to the demand for them, even with higher interest rates – which will support home prices and appreciation for years to come. As affordability declines, the asset becomes even more desirable which means those who own real estate will experience improved rates of return on their investment.

"Opportunity comes when the least number of people can take advantage of it."

Those are not my own words and the J school grad in me needs to include my source – Rob Luna. I was on a call this week where he spoke to a group of us about the economy and what he sees happening in the next 18-24 months. Rob is wealth manager for some of the wealthiest people in our country so he’s privy to a lot of information that you and I don’t get to discuss on a daily basis. After going over lagging and leading indicators of recessions and America’s economic health, he told us the same thing I’ve been promoting here. (Not to toot my own horn.) We need to focus on our own financial health so when an opportunity arises – say to buy a house with the right terms in place for you and your family to be able to improve your quality of life – you are able to take advantage of it. This means boosting your credit, boosting your income, boosting your savings and staying informed, which is the most important investment of all. Investing in yourself.

Long story short – Yes, it’s safe to buy in 2023 if it makes sense for you personally. To make it make sense, get your finances right. To get your finances right, find some trustworthy advisors.

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