2022 in Review

Wow, what a year! 2022 brought out the full spectrum of emotions in the real estate and financial markets. The year started with a bang, with the Stock market falling sharply due to stretched valuations and anticipation of rising rates. Looking back, this previewed more normal times for the real estate market. After a strong first quarter in real estate, we felt a slowing in the early fall as the Fed woke up to sticky inflation and started raising rates aggressively. With mortgage rates going from low 3% to over 7%, some buyers were forced to the sidelines, and the general market adopted a wait-and-see approach for the rest of the year.  

The Year Ahead

Where do we go from here? Every year you get a wave of predictions which I love to read and participate in. It's near impossible to predict the future due to so many variables, i.e., 2020. I plan to keep it simple this year and focus on mortgage rates and inventory levels. The reason for keeping it simple is that there is still a strong desire to own real estate, especially in the market's mid to lower end, and the market's underline conditions are still quite strong. 

What's the bottom line for mortgage rates?

Lawrence Yun, the chief economist for the National Association of Realtors, noted, "Pending home sales recorded the second-lowest monthly reading in 20 years due to increasing rates" However, he explained that there is typically a two-month lag between mortgage rates and home sales, and "with mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth." Although rates may have peaked at just over 7%, it will likely be a while before we see 3% interest rates again. Consumers have a way of adapting and will undoubtedly adjust to the new landscape of higher rates; they just need rates to stabilize.

The Case-Shiller Home Price Index, considered the "gold standard" for appreciation, showed home prices fell 0.5% in October but were 9.2% higher compared to October of last year. This annual reading declines from the 10.7% gain reported in September. Home prices have been softening, but Case-Shiller's 9.2% annual gain "is in the top quintile of historical performance levels," per Craig J. Lazzara, Managing Director at S&P DJI. And while home prices are now down 3% from their peak, this is a far cry from a housing crash of 20% that some in the media are predicting. 

What's the bottom line for home inventory?

Home sales will likely slow further in the first half of the year due to low inventory, but prices are unlikely to follow in any meaningful way. There will still be demand for desirable properties (location, good condition, floor plan, etc.), and the subpar properties (busy street, poor layout, overpriced, etc.) will take longer to sell. I advise sellers to price well and prepare their property/stage, and buyers will have to consider buying at today's rates with the option of refinancing in the future.

Whether you are buying or selling, I would love the opportunity to lead, guide, and protect your interest throughout the process. Contact me today.  

Work With Bounce

His dedication to growth as a real estate professional, since 2003, has divinely guided him into unprecedented levels of service that begin with his commitment to both his personal and professional development toward the highest good of his clients.
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