There is a lot of speculation as far as what is going to happen and when will a recession be here and what it will be like. First and foremost, I don't have a crystal ball. However, I do have data.
First, I'm not surprised that the fed decreased the most recent rate hike to 50 bps in part because the stock market has been on a downward trend for about a year now. To me, it's not surprising to think that a year later the fed would have year over year data that would reflect a much lower CPI, justifying a lower rate hike.
Rate hikes started showing up in early spring of 2022. I suspect that we have two possible points for when mortgage rates could truly come down and that would more than likely be spring or mid summer. Spring because that was when rate hikes started and that may affect our year over year data. Summer because that was when we began to see a slow down in the real estate market.
Regardless of what happens, it will not be a crash. First and foremost, people have equity in their homes and the number of distressed homes is at record lows. Mortgage Delinquency Rate The most recent report indicated that there were a total of 9 distressed homes in all of Orange County. Second, over 60% of current home owners are paying somewhere between 2.5 and 4% interest rates for their mortgage. These low interest rates are very discouraging for homeowners to move and pay more for a home and more for the mortgage.
The combination of nearly no distress and the lack of incentive to list your home because of the new interest rate you would be incurring by moving ought to contribute to very low inventory. Without exploding levels of inventory and what should be increasing demand because interest rates come down in 6 months to a year, there is no justifiable reason for a 2008 2.0.
No comments:
Post a Comment