How Long Until The Real Estate Market Corrects Itself?

My prediction?

arrowdown_moving

It has already begun!

Can’t see it yet but behind the proverbial curtain the levers are being pulled and the wheels turned to pull in the reins on the “HOT” sellers market we’ve been experiencing lately.

Sure the inventory is still quite low in most markets and sellers are still holding the high cards but history tells me we’re heading toward a more even keeled market that doesn’t favor the sellers nor the buyers…it’s even.

And, based on nearly 40 years of being a real estate broker seeing many ups and downs in our local market as well as nationally, we will actually see the shift starting in Q2 or Q3 of this year…depending on interest rates.

What this means is that right now through the Spring will be the best window of opportunity for sellers to sell quickly and for top dollar.

This is what my experience is telling me. Of course, I could be wrong but history tells me I’m not and in fact, the shift could happen sooner and much more dramatically.

No crystal ball(s) here! 🙂

It really boils down to interest rates. IMHO

Should the Fed decide to raise rates as indications predict, then it could be a disaster for the real estate market…if they go too far that is.

Here’s an interesting article I just read on CNBC:

http://www.cnbc.com/2015/04/01/dont-get-too-optimistic-about-the-housing-market-commentary.html

More thoughts on mortgage interest rates:

If Mortgage Rates Stay Low

If mortgage rates remain below 4.25%, both sales and house prices will rise this year. The economy is improving, and with an improving economy will come increased demand. If this demand is amplified by super-low rates, housing will do well.

If Mortgage Rates Rise a Little

If mortgage rates settle between 4.25% and 4.75%, sales will be down while prices drift slowly upward. A reduction in sales volume always proceeds price, and as long as mortgage rates stay below 4.75%, the pressure on pricing won’t be enough to overcome the inventory restrictions of cloud sellers.

If Mortgage Rates Rise a Lot

If mortgage rates rise above 4.75%, sales volumes will be severely impacted and prices may drift gently lower. The increased cost of financing will not allow buyers to bid high enough to support current prices. The discretionary sellers active in the market will be forced to lower their prices if they want to sell. The activity of these few discretionary buyers will cause prices to drift down at higher mortgage rates.

If Mortgage Rates Skyrocket

If mortgage rates rise above 5.25%, the housing market will be a catastrophe. Homebuilders won’t be able to sell anything, homebuilding unemployment will rise, triggering a recession, and the housing market will experience record low sales volumes and prices 5% or more below today’s levels. I consider this scenario very unlikely largely because the federal reserve would never allow it. They will start buying mortgage bonds again before they let housing kill the recovery.

Overall I don’t see this as a bad time for housing or the economy. If not for the specter of rising mortgage rates, I would be very bullish. My monthly real estate reports still report the market as relatively affordable despite high prices. We are not currently in a housing bubble, and although rising mortgage rates have the potential to cause house prices to top out, I don’t believe that will happen in 2016.

Predicting the future is mostly a fools game but we can plan our strategies in real estate taking historical data into account.

 

CONCLUSION:

If you’ve been considering selling your home or any of your real estate investments…get it done before Q3 2016.

Of course, this is just my opinion and I might be completely wrong!

If you want to chat more shoot me an email or ring me up on the phone.

P.S. If you have a contrarian view let’s hear it! Sharing is caring!

 

 

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I am a three decades+ veteran of the sales/marketing industry. I struggled at first to make a living but then had the good fortune to meet my mentor, Tom. Tom was, at one time, the #1 salesperson in the nation for his product which was also my product. I simply applied what he taught me and 'Boom' my career took off like a Roman Candle! I set records, won awards and trips, had all the goodies and discovered along the way how to live a balanced and rewarding life. After 3 decades of selling/coaching/training I now dedicate ALL of my time to helping others learn strategies that will get them where they decide to go. If you'd like a FREE Strategy Session go to: www.thesalessyndicate.com and fill out the request form.

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Posted in REAL ESTATE UPDATE!!, sales,strategy,passion,united, Sell more real estate

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