By Craig Erwin, Ph.D.
I got a post card from a real estate office listing the sale prices of nine local houses. Eight were sold above the list price, some as much as $90,000 over it. At the same time, some like real estate investor, Aarthi Swaminathan, believe we now have a housing recession even though the housing market was on fire a couple of years ago. But some markets have cooled off more than others.
According to Bankrate.com the average interest rate on a 30-year fixed rate mortgage was 6.76% on April 6th. That is sharply higher than the all-time low of 2.65% in January 2021 (according to Themortgagereports.com). Most still find it very challenging to buy a home because, while interest rates have soared, home prices have only fallen modestly.
In many markets there is still relatively strong demand for houses. Why? Families are not the only ones trying to buy houses. There are plenty of investors fighting over the limited supply. And some desperate home shoppers will stop at nothing to buy a home if they can afford it, even if it means paying high prices and high interest rates. And even though many forecasters expect a recession, the job market is still quite strong, making it possible, though expensive to buy. Of course, buying may be risky. If a recession comes, some recent home buyers may lose their jobs and their homes.
Some experts expect inflation to fall soon. If that happens, the Federal Reserve may stop raising and start lowering interest rates. If that happens, the number of home shoppers could multiply. The housing market has been on a wild ride the past few years. Buckle your seat belts because it may stay wild.
Do you own a home or are you looking? Do you think the housing market will continue to cool?
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