When it comes to what’s happening in the Housing Market, there’s a lot of confusion going around right now. You may hear one thing in conversation with your friends, see something totally different on the news, and read something on social media that contradicts both of those thoughts. And, if you are thinking about making a move, that can leave you with a lot of lingering questions. That’s where I can defuse the confusion. Here are the top 3 questions people are asking about today’s housing market and the data to help answer them.
1. What’s Next for Mortgage Rates?
Mortgage rates are higher than they have been in recent years. And, if you are looking to buy a home, that impacts how much you can afford. That’s why so many buyers want to know what’s ahead for mortgage rates. The answer to that question is: no one can say for certain, but here’s what we know based on historical trends.
There’s a long standing relationship between mortgage rates and inflation. Basically, when inflation is high, mortgage rates tend to follow suit. Over the past year, inflation was up, so mortgage rates were as well. But inflation is easing now. And this is why the Federal Reserve has recently paused their federal funds rate hikes, which means many experts believe mortgage rates will begin to come down.
And in some ways, we have started to see hints of slightly lower mortgage rates in recent weeks. But it’s certainly been volatile and will likely continue to be that way going into next year. Some ongoing variation is to be expected, but the anticipation is, that in 2024, we will see a downward trend.
2. Where Are Home Prices Headed?
While there’s been a lot of concern prices would come crashing down this year, data shows that didn’t happen. In fact, home prices are rising in most of the nation. Experts say that trend will continue, just at a slower pace that’s much normal for the housing market. That’s a good thing!
The graph below shows the consensus that prices will keep climbing next year, and in the years to come.
3. Is a Recession Around the Corner?
While recession talk has been a common thing over the past few years, there’s good news on that front. As experts look at all the leading indicators today, they are changing their minds and saying a recession is getting less and less likely. The latest results show that more experts now think we are not headed for another recession (see chart below)
This is big news for the housing market. And while the 48% to 52% split may seem close to half and half, the key thing to focus on is that the majority of these experts think we have avoided a recession.
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