My View of the Market – February 2024

Remember way back last month when Fed Chair, Jerome Powell, shared that it is likely that the Fed will cut rates up to 3 times in 2024? Do you remember how excited I was at this news? Well…that was so…January.

Here in February everything has changed. I’m not saying rates won’t drop at all. But how often, how much and when are now all in question. I suspect it will be much later than expected if and when they do.

What happened? Couple of things. That stubborn inflation inched back up rather than continuing it’s downward trajectory. Then there was the jobs report stating that were 335,000 newly created jobs in January. Jerome Powell and the Fed put those two factors together and put the brakes on any idea of lowering rates. Yes, rates still change almost daily, but we are now in a wait-and-see mode before we’ll see any significant cuts.

What does this mean for sellers? Conventional wisdom says it will adversely affect the numbers of buyers and the potential for escalation addendums this spring. However, there is still almost no inventory. In fact, turnkey homes are selling quickly with multiple offers on appropriately priced homes. So, if your house is move-in ready, you are in a great position to quickly get a great price.

For buyers, because of the continued inventory draught, they will have to continue to make concessions on what they consider to be their ideal home. This is not unlike when rates were lower, except back then they had to settle for less of a home because of competition and bidding wars. Now they still have to make concessions on price, this time because higher interest rates are constraining what they can afford.

Some good news for buyers: Several home inspectors I work with have been very busy in the last couple of weeks and are booked out for several more. This tells me there will be an increase in inventory in the coming weeks and months. Be ready with your loan pre-approval. Inventory is coming.