After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New Year, I have come, to believe, perhaps, the one, reality, of real estate, is, it is consistently, constantly changing, in a variety of ways! For a few years, we have been experiencing, near – historic, low, interest rates, as well as, unprecedented impacts on the world economy, created by several factors, but, perhaps, the single – biggest one, being, the ramifications, etc, created/ causes, as a result of this horrific pandemic! Although, no one, knows, for sure, what will occur, I feel it might be useful, to consider, and provide, my best – guess, in terms of home pricing, in the intermediate – term (This period is usually, considered, to be, from about, two – and – a – half years, to about 5 to 7 years). With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 of my guesses/ predictions.
1. Interest rates/ mortgage rates: Basic economics, past trends, etc, should indicate, interest rates, will not remain, at their current, historic – lows, for any substantial period of time. It has already, existed, for longer, than normal! We are already, witnessing, inflationary ramifications, caused by economic policies, of the past, few years, as well as, artificially – low, prolonged period of this, interest rate, policy, etc! I would expect, sometime, in the next year, or so (unless some, unforeseen – stress occurs), for, these to riser, gradually, and, for, the current, record pace, of home price rises, to either, level, or, grow, at a far – slower pace, or, even, come, back – to – earth, somewhat! This change directly impacts mortgage rates, and, when these are lower, it makes, more expensive houses, more affordable!
2. From sellers market to: Historically, the real estate market, is cyclical, and we are, currently, undergoing, a prolonged, sellers market, with buyers, out – numbering, inventory! It would make sense, to expect, the trend to change, from this approach, to, first, a more – balanced one, and, perhaps, even, at some stage, to a buyers market!
3. Supply and Demand: Like most economic commodities, real estate is based, on the Laws of Supply and Demand! This means, the more demand, the higher, the prices, and when it dwindles, prices drop! Most expectations is to see, a gradual, return to the cyclical conditions, often, witnessed, and experienced, in the past!
4. Impact of inflation: Traditionally, houses, have been considered, one of the best hedges, against inflation! However, with the steep, recent increases, which have far increased the rate of inflation, wouldn’t it make sense, for, these, to eventually, become, more level, etc? While, many anticipate, inflation, in the relatively – short – term, we will probably, return, to more predictable levels, in the intermediate – run!
5. All real estate is local: One of the challenges, to making these predictions, is, real estate, is, often, local, in – nature, and, different regions, and, even, neighborhoods, out – perform, others!
Although, I feel, these are most likely, to occur, remember, they are, merely, best – guesses, and no one has a Crystal Ball, etc! Proceed, cautiously, and aware, and align, your needs, priorities, perceptions, etc, with your personal comfort zone!