I've been licensed since 1978, and was active 5 years in the market prior to that. I've always done investment properties and flips. While every peak in the market is different, and there's some indicators that can shed some light on future values, I avoid market extremes like the current sellers market. I also avoided the 2007 peak for the same reason. I've seen 4 of these cycles now.
Everything I have seen thus far indicates buyer fatigue/less demand. It's starting to show up in random markets, but the bottom line is a slowdown in purchases. Yes, much of this is mortgage rate driven. First to pull out are the marginal buyers, the ones hat can't buy if rates go up by a point.
Ian Shepherdson is a guy I follow who's always ahead of the curve. He's Chief economist and founder of research consulting firm Pantheon Macroeconomics. When I say ahead of the curve, I mean he's an outlier at this point. However, He's saying what I'm seeing at ground level.
“The housing market is in the early stages of a substantial downshift in activity, which will trigger a steep decline in the rate of increase of home prices, starting perhaps as soon as the spring,” Shepherdson wrote in a research note distributed Sunday. This is how it always goes down. There's other factors at play, like the inverted yield curve which portends a recession about 75% of the time. A hot war in Europe which is strongly inflationary. Weird job numbers. Add that to a whole generation of Realtors that haven't ever seen a down market. It's a strange brew.
Bottom line, things are changing. There's a whole slew of recent buyers that are going to find themselves underwater. It's happened before. If I can offer them any hope, it's that eventually the whole fandango will start again, and what was once a crazy high will be passed again. It's cyclical, always has been.
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source https://www.reddit.com/r/RealEstate/comments/tq3aoy/buyers_freaking_out_theres_a_looming_slowdown/
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