Fridrich & Clark Realty, LLCJune 2022
June 2022
01/06/22 21:00
Everyone Is Wondering ‘What’s Going on with the Market?’
The most often inquiry that I get in conversations with family, friend and clients is “How’s the market doing?” My response for the last six to nine months is “incredible” or “unbelievable.” However, for the last month my response has changed slightly. While I remain enthusiastic about the market, I am trying to be more transparent about the surging market and the likelihood of sustainability. The Feds rate in- crease in rates was an attempt to slow down the growth and deal with inflation. While it remains to be seen the full impact of this increase, most experts believe it will slow the housing market. There were two hikes, one in early May and another in June, with the June increase of 0.75 percent of a point being the largest Fed rate hike since 1994. The hike is designed to cool an economy that has been on fire since rebounding from the Coronavirus recession of 2020. That dramatic recovery has included a red-hot housing market characterized by record-high home prices and microscopic levels of inventory. Home prices are driven not just by interest rates but by a complicated mix of factors, so it’s hard to predict exactly how the Fed’s new direction will affect the housing market. In the short term, higher rates are expected to slow down demand which, in theory, might lead to a downturn in activity for home buyers. For example, the monthly payment on a median priced single-family home, when assuming a 10% down payment, has risen by about $800 since the beginning of the year due to the increase in mortgage rates. Rates have jumped by 2.5 percentage points since January. Read More…
