Current State of The Housing Market - July 2022
There have been a lot of events over the past few years. Just 6 months ago we were cruising along with record low interest rates. Now the landscape in front of us looks much different.
Depending on your situation you may have been able to upgrade your house, move into that neighborhood you always wanted to be in or even just re-fi your house to cut down on your monthly payment. These are all good things. This is one of simpliest ways for the average hard working family to create wealth. In an enviorment where house pricing have been continually on the rise the low interest rates are paramount to young couples and first time home buyers finding that first house to call home.
Enter COVID, stimulas checks and a buying frenzy in deprishiating assets. When covid hit and the world shut down the world started to go stir crazy creating the desire for play toys like RV's, boats, 4-wheelers, new vehicles, etc. All of these items are great but deprishiate in value and have been over valued since the materials shortage began. I mean, I get it, how fun is it to take all of those extra funds and put them in your 401K. Which if you have seen the stock market lately wouldn't have done much for you anyways!!
So now we have the nice house at a low interest rate plus that cool new car or play toy. Enter the last 6 to 12 months. Material shortages have caused pricing in almost everything to rise greatly and caused the demand to go through the roof. On top of that, the war in Ukraine has extended the shortages of many goods including agricultural goods. Throw on gas prices and rapidly rising housing interest rates, and shit is just getting crazy.
What does all this mean for the housing market? Well, lets see, young couples are being forced to rent because interest rates and higher housing prices have priced them out of the market. Re-fi's have hit the breaks, higher prices houses are sitting on the market longer and we are actually seeing price drops on houses sitting on the market for to long. The cost of living is handing many families more than they can handle in food and gas making the idea of upgrading your home with a new higher interest rate less appealing.
Many real estate agents and investors that I have spoken with while out on various job sites are now predicting that the 2023 housing market will look vastly different than it does right now, and not for the good.
We are right on the cusp of what experts are predicting will be our next recession. If that is true, hold onto that low interest rate, save your money and dont get caught over playing your cards and buying more than you can handle.
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