Watch the original video: Is the Fed going to turn the market back on?
With supply and demand in a gridlock the market has cooled off; but pricing is beginning to lower and the market may turn around soon. In this video I discuss where the market is now, where things are headed going into 2023, and if it is a good time to buy. Watch my video to learn more. 👆🏼
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📉 Current Market Trends
As many of you know, the real estate market has cooled off due to the rise in mortgage rates. Here in Shasta County, in the month of November we saw a 47% decline in home sales compared to October. Nationwide we have found ourselves in a gridlock. Buyers are putting off purchasing because of where rates are at, and sellers are keeping their homes off the market because they do not love current interest rates or the replacement homes available.
🏡 Low supply for buyers
When it comes to the housing market we have two fundamental drivers, supply and demand. When we look at the peak of the housing market in 2007, we had 4 million homes for sale nationwide. Yet today we only have 1 million homes for sale AND 14 million more households. So, the demand is there, but there is simply not enough supply. Sellers are not listing their homes and new construction has been lagging due to the high building costs and the current uncertain market.
🏢 The Rental Market Cools
Despite the demand for housing, the rental market has begun to cool off as well. I have talked to multiple property managers who are all saying the same thing; more homes are for rent and there are less applications from renters. As a result they are having to lower their monthly rates to attract renters, driving the market down.
💵 Real Estate Pricing
Real estate is local, meaning what is happening here in Shasta County is not the exact same thing that we are going to see somewhere else. Every market is going to have some differences, depending on employment, wages and the amount of people that want to live there. Here in Shasta County, we are seeing many sellers who are very willing to cooperate with the buyers that are coming into the market because they know there are fewer buyers.
Typically, in times like these we would see sellers come to the market, increasing the supply and slowly bringing prices down, but sellers are looking at interest rates and are hesitant to enter the market. As a result we are not seeing the type of market that many people expected.
🗓 2023
Looking into the New Year, there has been a lot of talk about recession, unemployment and interest rates; but there is some good news. The last two inflation readings from the Feds, the CPI and the PCE report, came out showing that inflation numbers are beginning to cool when compared to a year over year basis. Meaning, what the Fed has been doing is starting to work. Although it has taken longer than we’d like, home prices have finally begun to come down. As we start to see inflation lower, we are also going to see some stability in mortgage rates.
This is important for those of you that are thinking of buying a home in 2023. Once we see that prices have dropped a little more and that mortgage rates have come down to a stable place, there is going to be a rush of buyers getting back into the market. Many people are trying to time the market and find the best time to buy, but I hope you’ve heard it enough, no one can predict the market.
🤔 So, is it a good time to buy?
One thing to understand is that when making any investment, it is about time in rather than timing. The fact is, in the last 21 years there has only been 2 years where real estate has not appreciated. If you hold property for 5 to 10 years, because of what is happening with the demand of housing that will only continue to rise, home values will appreciate.
🙏🏼 Thank you so much for supporting us this year.
My team and I are so grateful to be part of an amazing community like Redding. If there is anything I can do for you, please reach out to me. Have a Merry Christmas and a Happy New Year.
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