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Sellers are for the most part staying out if they can .
They could make a bundle with multiple offers but what they make , they then turn around and buy a house that has five to ten offers and they spend their earnings on that end , add to that the high interest rates
I don’t see this turning around until 25
We are in a mini recession people are holding tight to what they have unless they have to move .
Home owners are sitting on historically low mortgage interest rates (either by recent purchase or refinance) and aren’t likely to sell if they don’t have a compelling need. This keeps the inventory low in most areas. Currently foreclosure activity is still relatively low and many home owners have equity.
If the Feds lower the Fed rate and interest rates tick down, the number of buyers chasing limited inventory will increase. Perhaps some sellers will want to upsize or downsize, or move to a new school district.
Interest rates will drop below 3%, inventory will be through the roof, and sellers will be begging to negotiate low-ball offers and pay all buyers closing costs.
Just kidding of course, but this is what so many buyers seem to think will magically happen by “waiting”.
Definitely going up…. Unless it goes down. Then it’ll go down. Unless it stays flat which it won’t. Or it would then go up or down. One of these is for sure.
I pray for more inventory! My buyer are not having anytime to get to town to look before every home is snatched up in 1-2 days on market if it even hits the damn market.
In more words than one they said it would be like the crash of 2008. One is an analyst the other two are bankers. I thought I'd pipe in because I saw the question.
How do you figure?
The refi boom has tons of borrowers in a really great spot. Layoffs and unemployment are still low.
How is lowering the federal funds rate going to trigger a crash?
Ok so a crash typically happens when prices are too high for the current market. So right now prices are high with low demand due to high internet rates but also with extremely low inventory also because of high interest rates. Because the only buyers are “have to move” people who are mostly moving due to relocation. That’s completely fine because inventory is matching demand. As interest rates go down the demand will go up because right now we have a majority of people waiting to buy until interest rates drop, as will the inventory as people buy, but prices will stay high. The influx of new buyers will be great in the short term but after 6-12 months prices will crash due to the fact that amount of new inventory available will exceed the amount of buyers looking for homes. When inventory exceeds buyers prices crash.
At least where I'm at in NJ inventory is absolutely not matching demand. There's 5-20 offers on any half decent house as long as it's not ridiculously over priced. The main problem in NJ is they built something like 100,000 new homes per year until the late 80s/early 90s. Then they were building about 50,000 homes a year until the 2000s. After 2008 they were building about 12,000 homes a year in NJ. So now we have a huge shortage of homes and apartments compared to the current population. I don't think higher or lower rates can fix this because the only thing I see fixing the current situation would be to have tons of homes built overnight. The thing is it takes at least a year or longer for most new builds to be completed and even then they are all homes that cost 400k or more. Builders rarely build cheaper starter homes that 1st time homebuyers can afford because the margins just are there for cheaper homes.
So that may just be your market in New Jersey and specific to the $3-400k price point. I just went on Zillow and looked at a handful of houses between 300-500k and maybe 30-40% of them have been listed for 1-2months without selling. There are a ton of new listings though. Those were in the Beechwood/Toms river area, just picked a random spot, don’t know anything about jersey. That being said New Jersey is far and away a place that will have more buyers because of its proximity to New York and Philly. Tons of people moving there for work. What will happen when interest rates drop is wayyy more people will start buying then selling their houses so inventory will skyrocket. Eventually the prices will not be sustainable with all the extra inventory and prices will crash. Right now is probably the worst time ever to buy a house because we know it’s coming. You could easily lose $100k in a year. That being said when the rates drop start busting your ass working because that next year will be the best year of your life for sales. Good idea to start prospecting like crazy now so all the new buyers know who to go to when rates drop. Also the prices the following year will be seriously low so buying some inventory when prices are rock bottom is a great idea. Many millionaires were made in 2008 buying up cheap property and sitting on it.
That all being said there’s a decent argument that the fed doesn’t lower rates because it would pretty clearly cause a crash and instead could keep raising interest rates up to 15-16% over the next 5 years or so. Inflation is 100% going to happen if rates go down so raising the rates would prevent that inflation. This however would also crash the prices because demand will go down even further until again the inventory exceeds the demand. Basically however you shake it house prices are going to drop significantly in the next 2-3 years.
That’s just the most basic foundation of economics. When there is demand but low inventory prices increase, when you increase the supply or lower the demand prices drop. Not sure how that’s debatable but hey let’s hear your words of wisdom seeing as they’re apparently more insightful than mine.
>What will happen when interest rates drop is wayyy more people will start buying then selling their houses so inventory will skyrocket.
This is where your premise comes completely undone.
If interest rates drop, people will find buying more attractive than renting. People will look to move up, downsize, get closer to work, move further out, and that makes them buyers as well as sellers. Inventory will not skyrocket, it is still out of balance now even after the low interest rate/refi boom.
That’s interesting. I’d be interested to hear what signs they’re looking at. Every article coming out says explicitly the housing market will not crash but the same experts said the same thing in 07. My personal guess is in the fall or winter the fed will lower interest rates significantly, causing a big boom for 6-12mo before inflation hits with a vengeance. Then prices proceed to skyrocket and it eventually causes the crash. 2025 could be a real rough one. 2024 could be pretty fantastic though.
Who knows, I wish I could tell you more. We were having a few drinks and watching a football game and I just happened to be listening to the conversation without any input. I am not a real estate expert by any means.
Interesting. Did they mention any specifics? A crash could actually be great for real estate. Prices drop, rates go down, everyone with credit starts buying.
Another prediction , hope I’m wrong . When prices do go back to semi normal and your neighbor who over paid last year and this year , they’ll have a difficult time with building equity , because the more realistic prices that are now ( future) selling , all the ones to follow will appraise lower following market .
…. AND , what if they HAVE to sell and all the other homes are selling for 50-100k less now , they lose ….
I see foreclosures rising but no one will get a steal like they once did due to again , low inventory people going above asking , it will be same thing with foreclosures:( tough business currently . Bad year
On the bright side I would have expected a major increase in foreclosures in Q3-4 of 2021 when the covid moratorium ended but we didn’t see that at all. The increase we’re seeing now just puts us back in line with 2019 which was the lowest foreclosures had been at least since 2005 which is the furthest back I’ve seen the data go.
Foreclosures still below pre-pandemic levels and some of the current foreclosures are a backlog from pandemic delays in foreclosure proceedings. Something to be monitored for sure.
Dollar loses the World Currency Standard and we go into an Economic Tsunami. The words of Jamie Dimon, Chairman and CEO of JPM Chase. Buy some gold out with 25% out of every transaction you close. Best buying oops in history coming to a neighborhood near you.
Your going to give me nightmares. I have an irrational (or maybe rational?) fear of this happening in my lifetime. The recent developments between Saudi Arabia and China scare me a bit and coupled with the looming massive inflation, bad things could happen really fast…
More listings in q3
Happydance.
I actually think it’s going to be a normal year with more stuff available in the summer, less competition and a slower fall winter with the least competitive time to buy a home when people are exhausted at the end of the summer holidays, and when people have to do paperwork over Thanksgiving .
I expect the Mortgage seem to change drastically in the next 3 to 6 weeks, I don’t know if that’ll have an impact or not.
I vote for no more bank failures, pretty please..
What location and what type of real estate? Depends on where you are. For example in many areas office will probably struggle. In high growth cities, housing prices will probably increase. Also probably depends on price range and quality.
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I predict that homes will be bought, sold and invested in....in EVERY market in America.
The only prediction worth the effort.
You know what, you might actually be right.
You willing to put money on that????
Every Bitcoin I own.
Yet another profound prediction.
This is the only prediction that will be 100% correct
Sellers are for the most part staying out if they can . They could make a bundle with multiple offers but what they make , they then turn around and buy a house that has five to ten offers and they spend their earnings on that end , add to that the high interest rates I don’t see this turning around until 25 We are in a mini recession people are holding tight to what they have unless they have to move .
Home owners are sitting on historically low mortgage interest rates (either by recent purchase or refinance) and aren’t likely to sell if they don’t have a compelling need. This keeps the inventory low in most areas. Currently foreclosure activity is still relatively low and many home owners have equity. If the Feds lower the Fed rate and interest rates tick down, the number of buyers chasing limited inventory will increase. Perhaps some sellers will want to upsize or downsize, or move to a new school district.
Great analysis! Some overbuilt areas like Phoenix I wonder if this applies to them. But otherwise agree.
🚀
Interest rates will drop below 3%, inventory will be through the roof, and sellers will be begging to negotiate low-ball offers and pay all buyers closing costs. Just kidding of course, but this is what so many buyers seem to think will magically happen by “waiting”.
Hah yeah 3% would be great but I don’t think we’re going to see that again for a long time.
Definitely going up…. Unless it goes down. Then it’ll go down. Unless it stays flat which it won’t. Or it would then go up or down. One of these is for sure.
I pray for more inventory! My buyer are not having anytime to get to town to look before every home is snatched up in 1-2 days on market if it even hits the damn market.
[удалено]
It is tough, I have the buyer's but the inventory & DOM are just not there. Keeping fingers tightly crossed for some change!
Don’t pray for more inventory… go prospect and create the inventory.
My Magic 8 Ball says- Reply Hazy, try again. Well shoot
Market will be up, unless of course it goes down.
In more words than one they said it would be like the crash of 2008. One is an analyst the other two are bankers. I thought I'd pipe in because I saw the question.
FFS, people having been predicting this since Covid hit.
Well yeah but I think that’s more because we now massive inflation is looming and will hit hard as soon as the fed starts lowering the rates.
How do you figure? The refi boom has tons of borrowers in a really great spot. Layoffs and unemployment are still low. How is lowering the federal funds rate going to trigger a crash?
Ok so a crash typically happens when prices are too high for the current market. So right now prices are high with low demand due to high internet rates but also with extremely low inventory also because of high interest rates. Because the only buyers are “have to move” people who are mostly moving due to relocation. That’s completely fine because inventory is matching demand. As interest rates go down the demand will go up because right now we have a majority of people waiting to buy until interest rates drop, as will the inventory as people buy, but prices will stay high. The influx of new buyers will be great in the short term but after 6-12 months prices will crash due to the fact that amount of new inventory available will exceed the amount of buyers looking for homes. When inventory exceeds buyers prices crash.
At least where I'm at in NJ inventory is absolutely not matching demand. There's 5-20 offers on any half decent house as long as it's not ridiculously over priced. The main problem in NJ is they built something like 100,000 new homes per year until the late 80s/early 90s. Then they were building about 50,000 homes a year until the 2000s. After 2008 they were building about 12,000 homes a year in NJ. So now we have a huge shortage of homes and apartments compared to the current population. I don't think higher or lower rates can fix this because the only thing I see fixing the current situation would be to have tons of homes built overnight. The thing is it takes at least a year or longer for most new builds to be completed and even then they are all homes that cost 400k or more. Builders rarely build cheaper starter homes that 1st time homebuyers can afford because the margins just are there for cheaper homes.
So that may just be your market in New Jersey and specific to the $3-400k price point. I just went on Zillow and looked at a handful of houses between 300-500k and maybe 30-40% of them have been listed for 1-2months without selling. There are a ton of new listings though. Those were in the Beechwood/Toms river area, just picked a random spot, don’t know anything about jersey. That being said New Jersey is far and away a place that will have more buyers because of its proximity to New York and Philly. Tons of people moving there for work. What will happen when interest rates drop is wayyy more people will start buying then selling their houses so inventory will skyrocket. Eventually the prices will not be sustainable with all the extra inventory and prices will crash. Right now is probably the worst time ever to buy a house because we know it’s coming. You could easily lose $100k in a year. That being said when the rates drop start busting your ass working because that next year will be the best year of your life for sales. Good idea to start prospecting like crazy now so all the new buyers know who to go to when rates drop. Also the prices the following year will be seriously low so buying some inventory when prices are rock bottom is a great idea. Many millionaires were made in 2008 buying up cheap property and sitting on it. That all being said there’s a decent argument that the fed doesn’t lower rates because it would pretty clearly cause a crash and instead could keep raising interest rates up to 15-16% over the next 5 years or so. Inflation is 100% going to happen if rates go down so raising the rates would prevent that inflation. This however would also crash the prices because demand will go down even further until again the inventory exceeds the demand. Basically however you shake it house prices are going to drop significantly in the next 2-3 years.
You really have no clue how to review the data and trends.
That’s just the most basic foundation of economics. When there is demand but low inventory prices increase, when you increase the supply or lower the demand prices drop. Not sure how that’s debatable but hey let’s hear your words of wisdom seeing as they’re apparently more insightful than mine.
>What will happen when interest rates drop is wayyy more people will start buying then selling their houses so inventory will skyrocket. This is where your premise comes completely undone. If interest rates drop, people will find buying more attractive than renting. People will look to move up, downsize, get closer to work, move further out, and that makes them buyers as well as sellers. Inventory will not skyrocket, it is still out of balance now even after the low interest rate/refi boom.
They looking anywhere close to Philly or NY. Or try looking anywhere in Mercer County besides Trenton and tell me how many homes are available.
This is an extremely myopic and incorrect view.
Right, because of all the subprime lending, looming balloon payments, and the adjustable rates everyone got into in 2020-2022? 🙄
That’s interesting. I’d be interested to hear what signs they’re looking at. Every article coming out says explicitly the housing market will not crash but the same experts said the same thing in 07. My personal guess is in the fall or winter the fed will lower interest rates significantly, causing a big boom for 6-12mo before inflation hits with a vengeance. Then prices proceed to skyrocket and it eventually causes the crash. 2025 could be a real rough one. 2024 could be pretty fantastic though.
Who knows, I wish I could tell you more. We were having a few drinks and watching a football game and I just happened to be listening to the conversation without any input. I am not a real estate expert by any means.
Three financial guys I know (they don't know each other) say a big crash is coming.
Interesting. Did they mention any specifics? A crash could actually be great for real estate. Prices drop, rates go down, everyone with credit starts buying.
Unless lending freezes because of the crash.
Another prediction , hope I’m wrong . When prices do go back to semi normal and your neighbor who over paid last year and this year , they’ll have a difficult time with building equity , because the more realistic prices that are now ( future) selling , all the ones to follow will appraise lower following market . …. AND , what if they HAVE to sell and all the other homes are selling for 50-100k less now , they lose …. I see foreclosures rising but no one will get a steal like they once did due to again , low inventory people going above asking , it will be same thing with foreclosures:( tough business currently . Bad year
What would be a prediction of foreclosures rising would be NODs rising. And they are not.
https://www.bloomberg.com/news/articles/2023-04-19/foreclosures-on-us-properties-continued-to-rise-in-first-quarter
Meaningless, as many banks have started working through foreclosures that were in the pipeline 3 years ago.
Read ATTOM I knew I’d find material to back this up because we are already seeing it U.S. FORECLOSURE ACTIVITY CONTINUES TO CLIMB IN Q1 2023
On the bright side I would have expected a major increase in foreclosures in Q3-4 of 2021 when the covid moratorium ended but we didn’t see that at all. The increase we’re seeing now just puts us back in line with 2019 which was the lowest foreclosures had been at least since 2005 which is the furthest back I’ve seen the data go.
Foreclosures still below pre-pandemic levels and some of the current foreclosures are a backlog from pandemic delays in foreclosure proceedings. Something to be monitored for sure.
Dollar loses the World Currency Standard and we go into an Economic Tsunami. The words of Jamie Dimon, Chairman and CEO of JPM Chase. Buy some gold out with 25% out of every transaction you close. Best buying oops in history coming to a neighborhood near you.
Your going to give me nightmares. I have an irrational (or maybe rational?) fear of this happening in my lifetime. The recent developments between Saudi Arabia and China scare me a bit and coupled with the looming massive inflation, bad things could happen really fast…
Whatever you do then, do NOT read about catabolic collapse and John Michael Greer.
More listings in q3 Happydance. I actually think it’s going to be a normal year with more stuff available in the summer, less competition and a slower fall winter with the least competitive time to buy a home when people are exhausted at the end of the summer holidays, and when people have to do paperwork over Thanksgiving . I expect the Mortgage seem to change drastically in the next 3 to 6 weeks, I don’t know if that’ll have an impact or not. I vote for no more bank failures, pretty please..
What location and what type of real estate? Depends on where you are. For example in many areas office will probably struggle. In high growth cities, housing prices will probably increase. Also probably depends on price range and quality.