Does anybody have a grip on the housing market?

[Anonymous]

I’m trying to understand what is going on in the housing market but it seems like everything I read or anyone professional I speak to all have mixed messages. Articles saying the market is looking better while others saying the housing market is going to drop further and it’s a bad time to be in the market as both a seller and buyer. I’ve also heard a few realtors talk out of both sides of their mouth.

[Anonymous]

No one really knows what's going to happen. Monthly payments have definitely skyrocketed for buyers who need mortgages, but some people will still need to buy and sell houses. It's a game of chicken to see how long sellers can wait vs buyers. If supply stays tight, prices could hold. If it doesn't prices will drop.

There's also uncertainty about what will happen to rates both in the short and longer term. Realtors are pushing "date the rate and marry the house" to convince buyers that the pain is temporary and they can refinance later at a lower rate, but there's no guarantee that will be possible.

[Anonymous]

I honestly feel like its less certain than it was a few months ago when rates kept going up. Now that rates are moderating - I feel like spring could be hot. But then who knows after that.

[Anonymous]

Just buy what you can afford. Stop listening to these news articles pretending like they know. They also said that rates would hit 10% by the winter and prices would plummet by 40%. Focus on if you need to move, if you can afford to make the move in your budget, do it. Nobody has a crystal ball on the housing market.

[Anonymous]

The Fed stated that they are going to continue to raise rates so I think mortgage rates aren't going to budge much in the next year.

This completely sucks as we need to buy a new home next Spring for schools as our oldest will be at the end of elementary school and we are completely unwilling to send them to the local in bounds middle school, nor can we afford private. We need to reduce our budget and size of home and are now far more limited in options. Already stressed about it.

[Anonymous]

The scarcity of houses seems to be the reigning factor. Buyers are f*cked for the foreseeable future and the degree of rate increase required to push down prices in a market that thanks to years of low rates now has no inventory, would cause a recession. It’s Gina be higher rates for a longer time until they get to 2% inflation and I would not count in prices going down more than 10% from peak at the most. It will take minimum 2-3 years ti rebuild inventory from natural causes and new construction, probably 3-5. First time homebuyers will never ever catch up from this run-up in values. It is a generational divide.

[Anonymous]

This housing market is going to be the biggest multiplier of inequality that the nation has seen in generations. Unfortunately.

[Anonymous]

Anonymous wrote:The scarcity of houses seems to be the reigning factor. Buyers are f*cked for the foreseeable future and the degree of rate increase required to push down prices in a market that thanks to years of low rates now has no inventory, would cause a recession. It’s Gina be higher rates for a longer time until they get to 2% inflation and I would not count in prices going down more than 10% from peak at the most. It will take minimum 2-3 years ti rebuild inventory from natural causes and new construction, probably 3-5. First time homebuyers will never ever catch up from this run-up in values. It is a generational divide.

This is the most spot-on analysis I've read yet.

[Anonymous]

The short version of the story is that our workhorse macroeconomic models aren't well designed for the kind of economic shock that the pandemic represented, and so they haven't performed very well. We've had supply-side shocks before (like the 1970s oil crisis), but the specifics of how the shock operates (in this case, by reducing service employment dramatically and by disrupting product supply chains) turn out to matter a lot, and these specific types of shocks only really happen in a large-scale pandemic, which hasn't really happened since modern economics (or modern data collection) began.

This is why, for example, so many forecasters thought that inflation was so unlikely to be a problem right up to the point where it became a problem. It's also why inflation has been slowing for months even though unemployment is as low as it has ever been. There is lots of ongoing work that is trying to rectify some of these facts on the ground with the modeling frameworks that are used for forecasting, but it takes time for our models and our intuition to develop. Lots of prior research suggests that large scale unemployment is needed for inflation to get back to its long term average; the fact that it isn't happening that way means that we know that many things still need to be tweaked, we just aren't sure yet exactly how.

If I had to guess, nominal prices will be slightly down nationally, and flat to slightly up in metros like the DMV that have a history of rapid population growth but had relatively slow pandemic home price growth. Keep in mind that real prices have already fallen quite a bit, and that real prices are what most of our economic intuition actually concerns itself with. But, realize that you're hearing a lot of uncertainty because there actually is a lot of uncertainty by historical standards, even at the highest levels. (Also, realize that nobody ever made a living out of saying "I don't know")

[Anonymous]

Relatively slow? Prices are up 40% since 2018/9 in some neighborhoods. It's not even, but it's been a breathtaking ascent in prices.

[Anonymous]

Inventory is still so low and the higher rates won’t budge people who have fixed rates at half of what the current rates are.

More here https://fortune.com/2023/02/06/housing-market-bold-call-by-goldman-sachs-home-prices-to-bottom-soon-2023/

[Anonymous]

The only hope here that no one is really talking about is if the people who took out HELOCs for renovations cannot pay them now that the rates are higher.

[Anonymous]

Rates will not return to 3%, more likely to rise to 8% but probably stabilize around 6%. Prices will not crash as some predict; rather, prices will also stabilize to 100% ask to close. Houses remain a desired good in the DC area. Low inventory, prices only slightly less than the peak, and higher mortgage rates result in buyers, especially buyers stretching to enter home ownership, competing for homes at the lower end of the now still higher market. Those with substantial equity and other economic resources can continue to purchase the more desirable homes, just finance with innovative methods.

[Anonymous]

Increased interest rates only lowered prices in nondesirable areas; everywhere else (which includes most if not all of NOVA), the increase in interest rates was like an inflationary measure; prices stayed same and mortage prices just increased. THe increase in interest rates benefited absolutely no one.

What did we expect?
-Stimulus money (I wasn't against it, but it did have its effects)
-Lots of teleworkers now, especially high-income ones, have more disposable income
-Lots of two-income households with high incomes (and many of these also included in previous category) [for example, a household with two GS-15s, and one or both of them telework)

Lot of money floating around, no free lunch!

[Anonymous]

This PP, another factor is childcare costs--lots of the teleworkers are saving on these as well.

So all this to say, even with rising interest rates, families find more and more money in their budget to cover housing costs; of course the "market" knows this