The TOP 3 Housing Market Questions – Are These on YOUR Mind?

There’s a lot of confusion in the housing market these days – the market IS shifting! You’ve heard one thing on the news; another in your favorite podcast; you saw a social media post that you think maybe made a ton of sense; and your cousin said they are buying a home and the group skepticism at the Thanksgiving table added to the confusion. Surely, if you’ve been thinking about a move, you’ve got a bunch of questions on your mind. This is where a real estate professional (like me) comes into play! 

Here are 3 of the top questions I’ve been answering on a daily basis about today’s housing market with some data to help answer them for you:

1. When will Mortgage Rates drop?
Mortgage rates are higher than they’ve been in recent years and that has absolutely impacted how much home you can afford. It makes sense to be asking this question and, the truth is, no one knows for certain. But, we can look to historical trends for insight. 

The relationship between mortgage rates and inflation has persisted for quite some time. When inflation goes up, so do mortgage rates – this was the case this past year. However, there has been an easing up in inflation and the Federal Reserve has paused their federal funds rate hikes. This leads many experts to anticipate a drop in mortgage rates. 

We’ve seen some slight hints of lower interest rates in the recent weeks, though they’re still volatile and will likely remain volatile into 2024. Overall, many experts are anticipating a downward trend in rates through 2024. Aziz Sunderji, Strategist at Home Economicssays:“The bottom line is that interest rates are likely to be lower – perhaps even lower than many optimists think – in the weeks and months to come.”

2. What about Home Prices?
Many people have been concerned throughout the year that home prices would crash. Well, that didn’t happen. Home prices in most of the nation, including Minnesota, increased; though at a slower pace of appreciation than in recent years. Experts are suggesting that this trend in slower price increases will continue, and it represents a more normal market than we’ve seen in the past couple years – which is good for the market. 

The following graph from the Home Price Expectation Survey from Pulsenomics shows the confidence the 100 economists, real estate experts, and investment and market strategists have for home prices over the next few years. As you’ll see, home prices will keep climbing for the coming years. This means the home you purchase now will be worth more down the road, and the home you’re waiting to buy will cost more than it would now.

3. Is a Recession on the way? We’ve been hearing buzz about a possible recession for the last few years, and the regular Wall Street Journal polls suggest we have good news on that front. This time last year, most of these polls suggested we’d have a recession by now. Experts are changing their minds and saying a recession is less and less likely (see chart below): For the housing market, this is BIG news!

Yes, the split is about half and half, but the shift in thought is the focal point – the majority of experts think we’ve already avoided a recession. 

What I want you to know.There are many signs of hope for the future of the housing market. If you’re thinking about buying or selling it’s important to talk with a real estate agent to talk through those thoughts and questions and build a plan that will set you toward achieving your goals. When would it make sense for you and I to talk?