What the Heck is Going on Here?

The number one questions for people interested and wondering about real estate right now that I have heard to so much lately; “Is this a bubble?”, “Is the market going to crash?” “Should we wait?” Although these are great questions and there are aspects of today’s unpredictable real estate market where I can see why many fear this, like rising prices, rising rates, the sudden rate of change etc. However, I would like to share some information about what the market is actually doing and where is it actually going.

Now, I want you to know that this is not just all my opinion. This information here is information from fellow experts at NextHome headquarters who nerd out on all this data and compile it in multiple classes that we as NextHomies are able to take and learn from! Here is what I have learned:

-Interest rates have risen before. Home prices have risen before.

-Over 40 years ago, in 1978, the average home was $59,000. Then less than 10 years later, it was $95,000. A 61% inflation rate happened even though interest rates were at 11-16%.

-We are headed for a recession. And what that means is we will have at least 2 quarters of negative GDP. We had a recession in 2000, no one noticed. Many predict this recession to be similar to that.

-In most parts of the country, there is about 2 months of inventory on market. 6 months means a balanced market, 7 months is a buyer’s market, and 4-5 months is a seller’s market. You didn’t need me to tell you that we are in one of the hottest seller’s market in American history.

-With inventory this low, home values will continue to increase even with a 5% interest rate, still a historic low, and  the cost of waiting to buy could cost you a ton of money in the long run! Take advantage of that equity!

-Real estate has always had its up’s and down’s. Everyone remembers the 2008 crash and maybe people are getting flashbacks from then. Today, though, it is not as easy to get a loan for a home anymore and there are some other differences, as well. The biggest being that people have substantial amounts of equity in their homes and employment is way better. In 2008, home owners had probably around $25k and many took it out and used it to buy things like trucks and fun stuff or pay off credit cards. Today, nationwide, people today have an average of $150,000 in equity! They are using that money to buy more real estate, causing inflation but securing the purchase. Many are paying cash! Even at these prices, y’all, I have seen it. And, you can’t go upside down on a home if you don’t owe anything on it.

-The market does not determine whether someone buys or sells a home, life determines that. Getting married, getting divorced, having a child, becoming empty-nesters, job change, etc. This is what will make people buy and sell.

-The federal government like interest rates to be at about 6-7%, they like homes to appreciate 4% a year, and inflation to increase 2% a year. The reason interest rates are rising so much at such a high rate is because we are headed for that recession and they need to be able to lower them then again to stimulate the economy. So, in other words, refinancing will be a great option to many soon who are not happy with that 5.1% interest rate we are at today.

-And lastly, real estate is always great asset to protect your money. Even now. And it will be again tomorrow. During a recession. During a boom. The market is going to be different everywhere you go, however. California’s market is not the same as Wyoming, so make sure to talk with a trusted NextHome real estate agent in your area to talk about what is going on specifically in your market. And, remember, it is always a great time to invest in real estate!