Homes, condos, and coops are still selling due to the market demand.  It all depends on how you are pricing your property.  There are some places where bidding wars are still a common occurrence as the needs and wants of some buyers remain paramount regardless of the interest rates and prices.

Cash is still king and some buyers are putting down a large sum of money, so interest rates are not as worrisome for them as it is for others, especially those who have left the fray and decided to wait to save more money or leave the area entirely.

The question arises as to when this tumultuous environment will become stable once again, where inventory is normal and interest rates become affordable.  The answer is who knows?  What has to really occur is for prices to come down to earth, inventory has to increase and maybe rates might come down 1-2%.

Historically rates are somewhat normal as they were back in early 2000.  However, the rates escalated 11 times over the last several years at a pace never seen before in such quick succession since 1981, when rates at their height were around 18%.  But the median price of homes was $65,446 back then and monthly mortgage, taxes, insurance, and utilities averaged $514, according to the Washington Post.  At the time of the survey, rates were 11.6% nationwide and more than half of the respondents found the rate to be acceptable.  In January 1981 once rates hit 16%, then 85% of buyers were shut out of the market, even though home prices were significantly lower than today’s prices.

Although incomes have risen for some substantially and others are not as much as needed, the median price of a home is $416,100 in the U.S. whereas in January 2022, the price was $348,079.  This was a record high due to the pandemic, and reflected excessive demand from historically low interest rates and low supply.  This sharp increase and the much higher rates have put a monkey wrench into the ability of a majority to purchase a home.  So although rates are what some would call normal looking back over time, it’s the prices of homes that have caused the change in demand and what is doable for many.

What will occur in 2024?  Will the Fed lower rates, I am not very confident that this will happen.  This might be excellent for government debt as our current rates have caused our debt to increase to over $1 trillion just in interest alone per year and will be the fastest-growing part of the federal budget over the next three decades.

Will housing have the same allure as it has always had?  Will the Fed begin increasing the money supply once again. I don’t think this will happen in diluting the value of our dollar and adding to our national debt.  As per the Fed, rates will remain higher than normal for the foreseeable future and this might cause a lowering of demand and a further softening of prices.

Moreover, we could see an economy slipping into a more challenging recession.  I do not see a soft landing as business slows and layoffs increase.  Next year will be a new phase for our economy.  Will sellers feel more confident selling or will they be more afraid to due to the higher interest rates and giving up their considerably lower rates and not knowing where to go.  Or will they sit back watching prices moderate?

I believe from having conversations with many buyers, sellers and even investors that most are in a quandary at this time.  People are indecisive and concerned at the moment as to what to do.  However, if you can afford to purchase (stable job and business income) and plan to stay in your home for at least seven years, you must determine the cost vs. renting and if the numbers make sense in your brain, then they should make sense in your pocketbook.

Life is also a bunch of calculations and you have to feel comfortable in your decision making.  Some take more risk than others as it is your individual choice to do so.  If you were playing a game of chess, some know how to play the game and win and some do not.  So you must learn and understand how to win and not be in a losing position.

No one is clairvoyant in predicting the future, but preparation and doing your homework to be able to navigate the selling and buying process should enable you to make the proper decisions to be in a safe and profitable position.

Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck.  For a free 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com or via https://WWW.Li-RealEstate.Com