By Joseph Callaway
Cleaning off the crystal ball is full of doubt, and retrospection. There is no winning, only risk, but here goes anyway.
First, what do we know? Interest rates have recently gone up and then down as the Fed tries to quell inflation, while at the same time containing payments on the national debt. It’s a safe bet that rates will stay around 5%. Buyers and lenders would love to see a return to the threes, but wishful thinking only goes so far. We may see 6% again but 7% is unlikely. Many are moving forward with homes and planning to refinance later when and if interest goes lower. So, everyone is settling into 5% or 6%, which is still historically low. It’s just that we got spoiled at 3% and that memory will dog the market for at least 2023 and maybe 2024.
We know inflation is with us and if it goes down, it will be a long and slow process. Best to accept 5% for 2023 at least, which means all real estate, barring any market disruptions, will appreciate by 7 to 8%. So, a $700,000 home in January 2023 will be a $740,000 home in December.
How about market disruptions?
All these apartments we see under construction will be coming available putting downward pressure on single family home rentals.
The great post-pandemic crash of people who didn’t pay their mortgages for a while and then getting foreclosed upon didn’t and won’t happen.
We may see more homes getting listed, which is a good thing. Recent shortages of homes for sale only caused volatility in the market. A few sellers benefited, affordability suffered, and everyone got scared. This year should return to a calm and balanced market with buyers able to buy and sellers able to sell.
Joseph Callaway is with Those Callaways eXp Realty and has been selling houses in The Magic 85254 Zip Code for more than 26 years.
