America’s real estate market has been a horror movie for the past half-decade.
- First, limited supply and low interest rates created a seller’s market for the ages, culminating in absolute mania in 2021.
- Then, interest rates soared, leading to a purgatory state where nobody is buying homes because they’re too expensive, nobody is selling them because they want them to be more expensive, and builders have less confidence in constructing new ones.
And now, another plot twist.
Oh great, WTF is going on?
Average interest rates fell to 6.09% this week, down from 6.95% in November, and the market is (sort of) starting to heat up, according to The New York Times.
- Sales of new homes rose 2.3% between November and December 2022.
- But sales of existing homes fell 1.5%, marking the 11th straight monthly decline.
A Zillow economist told the NYT that while she expects continued interest rate declines to entice more buyers, home prices will likely see minimal decline.
Experts suggest an interest rate of 5.5% would be a Goldilocks range — comfortable for sellers and buyers.
So is that a happy ending?
Potentially.
Except, recession fears may spoil it. A bad economy would likely keep the housing market in limbo, so the real estate industry badly wants the economic “soft landing” the Fed is attempting.
As for renters: After huge nationwide increases, several major markets are seeing slight declines in monthly rents.
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