Are we in a recession?

To get straight to the point. We are in the beginning of one. Is this the start of a market crash? No. And here is why.

Mortgage rates have significantly risen over the past few months and it is hard to predict what is going to happen with them in the future. Rising interest rates, due to inflation, are starting to moderate the housing market. Home buyers who were once able to afford a certain price point are now finding themselves pushed out of their market. “Until inflation peaks, mortgage rates won’t either” says Greg McBride, Chief Financial Analysis, Bankrate. The low rates of 2020/2021 are in the past and if you are waiting around for them to go back down, you will be waiting for a while. According to the Wall Street Journal we will be in a global recession for the next 8-12 months. What does this mean? Lets dive into it.

Through out history during the beginning of a recession interest rates will rise. In order to come out of the recession rates are lowered to stimulate the economy. If you look at the chart below this it goes back into the 70’s. The yellow boxes are indicating a recession. One thing you can see throughout history is even though rates rise, they ultimately lower towards the end of the recession. This is great news for you if you are looking to buy! We can’t tell when or where this will happen, but it is a good indicator of what to expect moving forward.

So in layman’s terms, the housing market is going through a huge transition. Supply and demand plays a huge factor in this. As rates rise, this pushes out buyers meaning the demand is going to be less. The fed is trying to bring down the “frenzy” and see more inventory come to the market. One of the biggest advantages for a buyer, is more inventory is coming onto the market, meaning finding a home is going to be easier for you.

Another big question I get asked is “Should I buy a home right now? Are housing prices going to go down?” Well if you look at the chart below. These are 7 real estate forecasts for 2022, and not a SINGLE ONE is predicting values to drop. In fact, between the 7, values are expected to rise an average of 8.5% through 2022. The average appreciation in this country historically is around 3.5%.

So is it a good time to buy? YES. Why? Lets dive into it.

Millennials make up a HUGE part of our real estate market as they are entering into the age where they are considering purchasing a home. Millennials make up 43% of the housing market according to NAR.com. This is a 37% increase from the prior year. This right here is going to be the driving force to keep pricing where it is at, meaning home values are not likely to depreciate.

What’s the bottom line? We are in a recession, which does NOT equal a market crash. Experts are in agreement that the housing market is not going to crash, values are not going to plummet and supply and demand is the biggest driving force in our real estate market.

Our market is shifting, but that is nothing to be afraid of. Feel free to reach out if you would like to have a conversation about your situation, and if not is the right time to make a move. I would love to hear your thoughts on our current market!