New Year – Changing Markets….

Needless to say, 2023 was a year to remember in the Real Estate Industry. A year marked by higher interest rates than the last 20 years and an inventory that was the lowest for the same period of time. Having those 2 markers didn’t stop the cost of housing from going up at all. While some areas saw multiple offers with over asking prices, others remained flat with very little Residential housing changing hands. 

The Fed just announced that they will likely reduce interest rates several times this year and that should get some people off the fence when it comes to transacting real estate, however, the lack of inventory will still persist into the spring selling season. The key thing to remember at this point is if you have a home already and your interest rate is in the 2.5-3.5% range you will not be that excited to make a move. So as a buyer, you are left seeking a home at a higher rate than you thought you would and at a price you never thought you would ever pay. Sounds worse than it is. Yes, your rate will be over 6% but if you need a home, buy one that fits your budget right now. If the rate goes down, you may be able to refi or just recast your loan. At any rate, you will have a roof over your head that you cannot be evicted from unless you fail to make your mortgage payments.

As for the folks who already have a home, as long as it still fits, stay but if not, consider taking your equity and right sizing your housing – then ride the market to the next peak. You can use your equity to help a younger person into their first home or plan for your children and grandchildren’s education by investing in a rental. 

The harsh reality is either you have a home or you don’t and if you don’t, you will be at the mercy of the shrinking rental market with nothing to show for your housing dollar than an empty bank account. The cost of housing is relative to the salary that you make, your ability to control your expenses and the health of the economy. 

Remember that they do not make any more dirt unless you want to buy in Iceland where the new dirt is lava flowing underfoot. Location, location, location…..