Summer 2023 Real Estate Market Update!
Seems like the media always promotes doom and gloom. There are a lot of 24 hour news cycles that have to be fed, so we get a lot of crazy information. Bad news is more interesting than good news! Real Estate and construction represent 16% of the US economy, so it’s a target for bad news all day, everyday.
The truth is, the media doesn’t control the Real Estate market. Buyers and Sellers are the market and in our country today we don’t have enough inventory to meet the demand for houses. But “the market is going to crash…” Well not quite. A quick look at the facts tells us otherwise. Today there is more than $27.8 billion in home equity in the US. 39% of homes in the United States are owned free and clear (you can’t foreclose on house that has no mortgage!) Additionally 29% of homes have more than 50% equity. This means that 68% of homes have more than 50% equity or are owned free and clear. The crash of 2008, 2009 cannot happen again. It is a physical impossibility. There is no housing market crash coming! There are no bunches of foreclosures coming. Waiting for the market to crash is a bad strategy. Home prices only go up over time.
Days on market have grown some overall, but now they are down again. 74% of homes sold in May were on the market less than one month. Housing demand remains high even with increased rates. Most all industry and financial experts are predicting interest rates will begin coming down by year end and keep on easing through 2024 and in the 4% range by 2025. Real Estate is all about supply and demand. We have one of the lowest inventories of homes in decades. Many sellers are waiting for rates to drop so they can move up, and we already have a deficit of 5 million homes nationwide. However, the biggest factor of increasing housing demand is the coming of age of the Millennials. Millennials are the largest population group in our history. Bigger than Baby Boomers. They’re now approaching their mid 30’s and realizing they want a house! A lot of Millennials rent their homes. There are 44 million renter households the US. Of which 3 million of them make over 150k a year! It is very expensive to rent and many are looking for a home to own.
Again, Supply and Demand. So, in spite of basic economic factors, indicators, trends, inflation, etc… , we have more Buyers than houses today. Adding in the coming surge of Millennials, plus thousands of buyers waiting for rates to drop and we are standing on the doorstep of the largest wave of home buying in U.S. history! If you’re an investor and looking to buy, the time is now. Yes, prices are up from what they were, but aside from market corrections in some sectors values will continue to rise. If you’re looking to buy your first home or sell and move up, the time is now. Remember “You buy the home, you rent the interest rate”. When rates begin to come down and show some downward momentum, what do you think will happen to prices? Prices will rise because of simple supply and demand. More people will be wanting to buy so our already limited supply of houses will only become more valuable. So remember what our Grandfathers said “Buy you some land because they ain’t making no more of it!
- John Teel
