Hey there, so there was an article that came out from the National Association of Realtors. Lawrence Yun. He’s the chief economist. So he actually has a very interesting take on what could happen to housing prices. Most people see us going into a recession and make the assumption that because we are going into a recession that house prices will in fact decrease. What he is saying is, instead of that happening, in fact, he is thinking that the house prices may increase 1% in 2023 and up to 5% in 2024. And the reason is because when you look at house prices, you have to look at supply and demand. And so our inventory, our supply is still lower than it was back in 2019. And because of that, you have an artificial increase or stabilization of prices, because if you have a thousand of some item and you only have 100 of some item, you’re going to have a price difference there. And that’s going to offset any decreases that you might have.
The other thing to look at is obviously the Fed. Right? The Fed is increasing these interest rates. And if they keep on increasing these interest rates, we’ve already seen the demand for homes go down. And so if they keep doing that, that is a factor that could offset this number. Now, if they slow or stop their rate increases, then the rates will start to go down, which will increase the demand for homes. And let’s say again that we don’t have a glut of supply, right? We don’t have a thousand homes hitting the market in any given market across the country. And on top of that, we have slowing interest rate increases, in fact, possibly decreases that could keep our markets stable or maybe even lead to a slight uptick in prices. And I think that’s what he’s trying to say, is that there are many, many factors at play here. And obviously we don’t control the Fed decision. We don’t control whether personal income goes up because that’s another factor.
If you make more, even though the prices of these homes may go up, you will be able to afford more as well. And so that again brings the demand back. And we don’t have a problem with supply or prices going down. That all is stuff that we have to take into account. And you can see how many of these factors are shifting and we don’t control a lot of these factors. And so there is a big question about, okay, what is going to happen? How is this going to play out? I think that’s coming across a lot in the news that you’re reading right now is there are many analysts that are saying, well, everything’s going to tank all the way up to people who are saying that prices could, in fact, increase. Right now. I think it’s very important maybe not to make a decision as to what you think the market will be doing, but to look at the market as it goes along and then react to anything that does play out and make sure that you’re paying attention to these numbers, because then as you see things play out or you hear things play out, you can now take advantage of where we are in that market and look to either buy or sell, depending on whatever side you are of that transaction.
Thanks for watching. I hope this was eventful for you and we’ll see you on the next one. And this article is in NAR library. You can look up Lawrence Yun. Y-U-N. Thank you.
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