“We are on the doorstep of one of the biggest purchase sprees this nation has ever seen.”
– David Stevens, Former Assistant Secretary of Housing
and Federal Housing Commissioner for HUD.
People frequently ask me for market predictions. I’ve found this challenging because the market is so complex. The prediction above was made during a recent briefing to Compass agents. While I think that the ‘spree’ Mr. Stevens refers to will largely be seen in the first-time home buyer and investment-grade housing markets (not so much here in Indian Peaks), he makes credible predictions and useful recommendations.
Two Market Drivers for 2023
- First-time home buyer bubble - The peak age for first-time home buyers is 34 years old and there is a population bubble larger than the Baby Boomers group now reaching this age.
- Quantitative Tightening (QT) ending – The Fed has been raising interest rates to slow the economy. That is predicted to end in the coming months. When it does, mortgage rates will ease.
Two Predicted Effects
- Buyers will return to the market this year. We’re already seeing it.
- Rising demand combined with low inventory from the long-term housing shortage will return us to another strong seller’s market by the end of 2023.
Recommendation #1 - Buy in 2023
For many, owning real estate is a path to prosperity. I feel lucky that both of my young adult daughters now own their homes. One has even begun investing in real estate with a short-term rental property. I’m so proud of them both for what they are accomplishing. I’m also relieved that they now own ‘a piece of the rock’ and are in greater control of their financial destiny.
Unfortunately, the data shows that most young adults have yet to do the same. Last year many put home-buying on hold to ‘wait out the market’. They cite too much competition, high prices and rising interest rates. An oft-repeated (and tragically wealth-crushing) refrain I hear is, “I’ll wait for prices to level out and then I’ll buy a home.”
But they don’t. They never do. Prices briefly correct and then, in what seems like an instant, they continue their inexorable upward climb. Often by the time we realize it, and before we can act, the moment has passed and we’re back waiting for prices to ‘level out’ again.
Buyers, don’t wait. We are in ‘the moment’ right now. Competition is going to get stiffer over the next several years. Buy soon and you’ll be happy that you did.
Recommendation #2 - Buy First, Sell Second
Have you wanted to move but have held off hoping for a better market? If so, you’re not alone. Now, however, may be the moment you’ve been waiting for.
We are in a market where home prices have moderated but they will surely begin to climb again. If you can swing it, buying your next home now, then selling your current home later in the year promises to yield the best financial outcome. Current mortgage programs can help virtually anyone get this done. Let me know and I’ll send you great mortgage lender contacts.
“Don't wait to buy real estate. Buy real estate and wait.”
-- Will Rogers
I hope everyone will take a moment to consider their real estate opportunities right now. Are you looking to downsize? Move closer to grand children? Will there be a better opportunity to make it happen? Let me know if you want to talk it through.
And for those with young adults in their orbit, I hope you’ll encourage them to explore their options now, while the market is relatively calm and they still have time to follow Will Rogers’ advice.
As always, I remain at your service. Let me know if I can help.
Brian
