In the current landscape of the housing market, confusion seems to be the prevailing theme. Conversations with friends, news reports, and social media can offer conflicting perspectives, leaving you with a myriad of questions, especially if you're considering a move. This is where a reliable local real estate agent becomes invaluable.
Explore the pressing questions on everyone's minds regarding today's housing market and discover the data-backed answers that can guide you through the uncertainty.
- What’s Next for Mortgage Rates?
Mortgage rates have surged to levels not seen in recent years, impacting the purchasing power of those in the housing market. Prospective homebuyers are understandably eager to understand what lies ahead for mortgage rates. While no one can predict the future with certainty, historical trends provide some insights.
The relationship between mortgage rates and inflation has endured over time. When inflation is on the rise, mortgage rates tend to follow suit. In the past year, inflation was elevated, leading to an increase in mortgage rates. However, with inflation showing signs of easing, the Federal Reserve has halted its federal funds rate hikes. Many experts believe this shift will contribute to a decline in mortgage rates.
Recent weeks have offered glimpses of slightly lower mortgage rates, albeit with notable volatility. The trend is expected to continue into the next year, with some fluctuations anticipated. Looking ahead to 2024, there is optimism for a downward trajectory, as highlighted by Aziz Sunderji, Strategist at Home Economics:
“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.”
- Where Are Home Prices Headed?
Despite initial concerns about a potential crash in prices this year, data reveals that such a scenario did not materialize. Instead, home prices are on the upswing in the majority of the nation. Experts predict that this upward trajectory will persist, albeit at a more gradual pace, aligning with a healthier and more typical trend for the housing market – and that's positive news.
To underscore the confidence experts have in this sustained appreciation, consider the insights from the Home Price Expectation Survey by Pulsenomics. This survey, encompassing a national panel of over 100 economists, real estate experts, and investment and market strategists, indicates a consensus that prices will continue their ascent in the upcoming year and beyond, as illustrated in the graph below.
- Is a Recession Around the Corner?
Despite the frequent discussions about a possible recession in recent years, there's positive news on that front.
The Wall Street Journal (WSJ) consistently surveys experts on the likelihood of a recession. At this time last year, the majority of these experts anticipated a recession to have already occurred. However, upon reevaluating current leading indicators, experts are shifting their perspectives, suggesting that the probability of a recession is diminishing. The latest survey results indicate a growing consensus among experts that we are not on a path towards another recession, as depicted in the chart below:
This development holds significant implications for the housing market. Although the 48% to 52% split may appear almost evenly divided, the crucial takeaway is that a majority of these experts now believe that we have successfully steered clear of a recession.
Bottom Line
The key insight? The data indicates there's no need for alarm; in fact, there are more encouraging signs. Connect with a local real estate agent to delve deeper into any housing market questions you may have as we approach the new year.
