My View of the Market – January 2024

Some of you may have taken a break from your holiday merriment and paid attention to the latest Federal Reserve meeting in December. You didn’t? Well, I did for you. So, for those of you that have been too busy, here is a brief recap of the pertinent information.

Fed Chair, Jerome Powell, shared some great news that the Fed is not planning to raise rates for the foreseeable future thanks to the easing of inflation. In fact, not a single Fed official believes that there is a need for any future rate hikes. This indicates that borrowing costs have already peaked (imagine my giant WOO HOO! here).

Even better, Powell said that it is likely that they will cut rates up to 3 times in the next year. Music to our ears! So, with that fantastic news, how will it impact our local real estate market?

The fun is just getting started, as starving mortgage lenders are salivating to get out in front of their competitors and gobble up market share. Many are gambling that short term losses with increased market share will make them winners as lower anticipated rates materialize. I can feel rates lowering as I type this.

Think about this. September mortgage rates were as high as 8%. You’ll remember my commentary from last month. In the fall, our real estate market virtually fell off a cliff. Now, rates are in the mid-6’s. Far more palatable for buyers. And, like I said, lenders are hungry. One company I know is offering rates as low as 6 1/8%! Did that perk you up? Call or email me and I’ll get you connected.

From my view, the immediate future is predictable. As rates drop, more buyers start shopping. More buyers means more competition. All the while, inventory is still low because would-be sellers are desperately hanging on to their bargain mortgage rates. Fun fact. Did you know over 90% of the mortgage loans in the US have rates less than 6%?  Death, divorce, and relocation are still the primary reasons for most homeowners to sell. That could change this spring/summer as sellers have been holding off, but that has not been the case in the past few years.

My prediction is that spring promises to see rising home prices and potential for bidding wars.