February 14, 2023
The Housing Market Is Off to the Races
January was a hot month where we saw buyers jumping back into their home searches as mortgage rates took a brief yet significant nose dive compared to where rates were Q4 of 2022. For this reason, we experienced more properties going into multiple bidding scenarios, giving sellers a boost of confidence to leave no money on the table if they didn't have to.
As expected, the facts haven't changed much entering February. Properties that have been sitting on the market for 30 plus days have had a surge of interest and we are continuing to see sellers willing to hold out and have their properties on the market for more than a month to get their target exit prices.
Fears of the Feds raising the federal funds rate to fight inflation triggered some volatility in the home mortgage sector last week but promising labor market and easing inflation stats ultimately left the 30 year fixed rate relatively stable. As a result, we have been off to the races in Q1 and don't anticipate the market to slow down in the imminent future.
As always, whether you are in the market for a home or investment property purchase or interested in selling, our team is at your disposal.
What We're Reading
Unemployment numbers reached the lowest point in 54 years (dating back to 1969). Today the unemployment rate is 3.4%, after 223,000 jobs were added in December. What does that mean for housing? Well, there are some mixed messages making the rounds, such as this article in HousingWire: January’s strong jobs report could spell trouble for the housing market.
First, low unemployment means that fewer people are afraid to lose their jobs, so there is more confidence that people can pay their monthly living expenses (as well as travel and entertainment, etc). With low unemployment, there can be more consumer demand and spending, which can lead to inflation. As we have seen in recent months, inflation reduces the purchasing power among consumers. Additionally, the Federal Reserve will also look to raise interest rates to temper inflation. The Fed had already done this multiple times in 2022, and it seemed we may have been coming out of that cycle, but it is now expected that we may have additional rate hikes further into 2023. Federal rate hikes do affect mortgage interest rates (especially short-term rates), causing them to go up and making borrowing more expensive for homebuyers.
To complicate matters and despite record low unemployment, a number of major corporations have announced layoffs recently, including Google, Amazon, Microsoft and Salesforce. These tech companies often pay higher salaries and their job losses could have greater impacts to housing in the more expensive markets. Yet, many of these employees are getting re-employed rather quickly since there are more job openings than there are unemployed adults. It remains to be seen how the rest of 2023 will pan out for the overall economy, including jobs and the housing market.
Stay up to date on the latest real estate trends.
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