Welcome Back for another addition of Piatt News! All things real estate. Let’s get to the point.
What has been lingering in the minds of industry professionals and consumers? In a nutshell….
- Will mortgage rates come down?
- Will home prices fall?
- And will agents still be relevant this time next year?
So, will mortgage rates go down? Just google it to find out, or do not! But do know, it is one of the highest consumer trend searches at this moment in time. A few things to consider; we are in an election year and inflation is still, at an all-time high. What is the typical trend for this economic outlook? If inflation drops, mortgage rates “normally” drop; however, I believe we need to see a significant drop in an inflation. My two cents, rates will not go below 6%. In fact, I believe in 2025, we might see rates hit 8% or so.
However, this is a broad analysis and subject to argument. By looking at recent mortgage rate performance post-inflation reports, there hasn’t been a direct correlation between an increase in inflation and a corresponding increase in mortgage rates. Let’s look closer:
- January 2024: The report released on January 11 showed the inflation rate rising in December 2023 to 3.4% from November’s 3.1%. According to Mortgage News Daily, the rate on a 30-year fixed mortgage then dropped from 6.72% on January 11 to 6.69% on January 12.
- February 2024: The February inflation report (for January) showed inflation at 3.1%, below December’s 3.4%. The mortgage rate for a 30-year fixed loan was 7.13% on February 13, the date of the report’s release, but it dropped to 7.09% the following day.
- March 2024: March’s report showed inflation increasing slightly from 3.1% in January to 3.2% in February, except this time the opposite occurred. The rate for a 30-year fixed mortgage went up from 6.92% on March 12 to 6.94% the following day.
- April 2024: The April 10 report saw inflation spike from 3.2% to 3.5%. Mortgage rates again rose in tandem, going from 7.34% that day to 7.37% on April 11.
If that’s true Laura, and rates do continue to increase, will we see a drop in home prices? Consider this, the further rise of already-elevated mortgage rates and home prices in the past few weeks amid a prolonged inventory shortage has dampened the hopes of prospective buyers. Re-read the last part, inventory shortage. This is THE factor when considering whether home prices will drop.
However, here is what experts are saying; “despite ongoing affordability hurdles, Fannie Mae forecasts an increase in home sales transactions compared to last year. Experts also anticipate a slower increase in home prices over the course of 2024 compared to recent years. However, price fluctuations will continue to vary regionally and depend strongly on local market supply.”
Piatt’s 2 cents, this is the new normal. And there will always be a reason to buy and sell real estate.
Let me reintroduce to you the 5 D’s:
- Death
- Divorce
- Duplication
- Destination
- And now…. DEBT.
Which means, if you need to buy, sell, relocate, get a new job, have a baby, become an empty nester; you will still need to buy or sell another home. And that my friends, is when you will find out how valuable a real estate professional can be. Which answers the last question. Yes, Real Estate Professionals will always be relevant; at least the great ones.
The future of real estate agents depends on industry professional execution. Piatt’s 2 cents; Real estate agents will continue to play a vital role in the industry. They will adapt to changing technologies and market dynamics, offering expertise, negotiation skills, and local knowledge that clients value. Something that an average consumer will benefit tremendously from.
The future of real estate depends on all of us professionals within the industry. Education, professionalism, technology, and market awareness will be crucial in the success of real estate agents today. Make sure you’re surrounding yourself with the professionals that do more than close your escrows well; we provide business solutions within an evolving industry.
