Let’s take a minute to take a look at what is happening with the economy and real estate market because recession is truly top of mind for many. Obviously, we don’t have a crystal ball, but a number of indicators point to economic slowdown, though not all economists are convinced that a recession is imminent. It’s fair to think that many of us remember the impact of the last recession and the direct impact on home values. It is important to remember that the Great Recession was very specifically triggered by cheap credit and lax lending standards which left banks holding trillions of dollars in worthless investments in subprime mortgages. This time around we’ve watched housing prices soar, but most homebuyers managed to lock in record-low interest rates, thus keeping monthly payments manageable despite climbing prices.
Even if the economy takes a dip, we shouldn’t see the catastrophic impacts of the last recession. Rising inflation is one of the indicators that a recession may be coming, which we are obviously seeing, but keep in mind that for the moment the U.S. job market remains strong and the recent interest rates spikes were purposeful moves specifically intended to combat inflation. So, what’s the upshot? Well, if we may clarify with a run-on sentence: inflation is up, so interest rates were raised, which made houses less affordable, which has led to a slow-down in the real estate market, and so now there is more inventory than we’ve seen in over two and a half years. And, sidebar, inflation has started to slow, so things appear to be working as intended. At the end of this, we should have more economic stability and housing inventory. Hang in there. We will!
Project: Real estate brokerage’s monthly newsletter distributed to colleagues and past and potential clients.
Objective: To make a potential recession, rising interest rates, inflation, and the overall state of the housing market less scary for prospective homebuyers.
Elizabeth Merritt 