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How's the Market?

The first questions I always tend to get in Real Estate conversations is, “How is the Market?”

This year with rising rates, inflation, and headlines about banks in trouble…I hear it first in ANY conversation. People see me and's like the new form of 'hello.'

I recently read an article on Inman (Real Estate News for Realtors and Brokers), that was very helpful in answering this question. The influence of uncertainty is always a big limiter, so clearing up some of the various headlines you may have seen will hopefully help.

Interest rates follow inflation.

Key takeaway: the Fed is dedicated to combating inflation, the Fed’s March 22nd decision to raise the fed’s fund rate an additional 25% shows their commitment to reigning in inflation.

Is now a good time to buy?

Here is a quoted segment from an article written by Jimmy Burgess. Questions were posed to George Ratiu, chief economist:

“Home purchases are driven by life events, Ratiu said. Every potential buyer should ask themselves these two questions:
1. Am I in a stable financial position, including having a down payment available along with sufficient savings should an unforeseen personal finance disruption occur?
2. Do I plan to be in this neighborhood or area for a minimum of the next 3-5 years?
When posed with the question, based on the current economic environment, should people buy now or wait, Ratiu responds:
“If you are answering yes to both of these two questions, then buying now makes sense. If the answer to either of these two questions is no, then you should consider waiting until the answer to both is yes."

“The time to purchase is when your life events merit purchasing. Home prices may fluctuate up or down in a one- to two-year period, but when you have a minimum of at least three to five years that you plan to be in the home, there are clear benefits to owning a home.”

David Childers, President at Keeping Current Matters chimes in to remind consumers that the long-term benefit of owning always outweighs renting and reminds us “time in the market is more important than timing in the market.” The percent change in home prices since Q1 1991 to Q2 2022 is 332.1% in Texas….that beat California’s change of 300% and the National Average of 289.1%.

The real hope is that the higher interest rates may allow a scenario for price stability, increased inventory and the opportunity for buyers that have had difficulty in the past due to fighting multiple offers. The hope is they can actually buy a home. Both Childers and Ratiu cite increased inventory as a main factor to get there.

Works Cited: Jimmy Burgess. March 30, 2032. How did we get here? How to talk about the economy with your clients. [Inman].

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