The most important conversation we should be having right now is whether or not it is the right time for someone to buy or sell. This market is tricky.
There are two reasons why.
The first is that DISTRUST has never been higher. People don’t trust anything they are told right now. They definitely don’t trust the media or public figures, they don’t even trust doctors. So it's very hard for the consumer to know if the advice they are getting is based on factual data or skewed clickbait.
The other reason is because you are expecting me to tell you to buy or sell now because it benefits me.
If there is anything I know for sure about this market is that it’s not the time to sell. I'm playing a longer game.
There are a lot of factors that impact whether or not it’s the right time for someone to make a real estate move. The most volatile one right now is interest rates. But there is also home prices and wages and their personal plans for the next few years. I am frequently asked, “Is now really a good time to buy?” My response is always the exact same. “That’s a very specific question that has a lot less to do with the market and a lot more to do with your personal finances and plans.”
I don't know the ins and outs to your personal info yet but I can tell you about the market so that you at least know what to expect. It’s not my goal for you to feel pressured based on what we are seeing in the market, it’s my goal for you to feel prepared to deal with it. So lets talk about what we are predicting in terms of interest rates and how that will affect supply and demand which in turn translates into a trend with home prices going up or going down.
I always like to remind folks that until they purchase a home, we refer to values going up as home prices. Once they are a homeowner, we get to flip that script to values going up being referred to as appreciation gains.
Not sure what’s happening with interest rates?
I got you. Inflation has been the major driver of interest rates and we are now – thankfully – beginning a period of deflation. Grocery prices for the first time since 2020 are coming down. The producer Price Index showed that producer inflation has come down 9% over the past year. Consumer prices historically follow this producer index so we should see even better PCE numbers next month. All this goes to say that inflation has definitely peaked as these readings continue to improve, mortgage interest rates will also improve.
Many fear that as prices come down, more buyers will come back to the market and with limited inventory – we could see a reacceleration of home prices. As I said though, that’s only a problem when you’re on a certain side of it. For homeowners, that’s great news.
That being said…
I also like to explain that there might be a few reasons not to buy right now.
You don’t want to hold the home longer than 2 years. Unfortunately in most areas this is not a market where you can flip house for a profit – you’ll need to hold this asset about 3 years to make a profit. You don’t have to live it in three years, you can rent it out but I want you to be aware of these forecasts for return on investment.
So, what do you think? Should you buy in this market?