In May, with the Fed’s attempt to fight inflation, our 30-year term fixed mortgage rates hovered near 5.25% and in June, they flirted with the 6% rate, which are cooling the demand for all types of home sales. Fewer home developers and agents reported price increases extending the “cool” trend since March and ended one of the longest hot streaks in the Real Estate history. Just like any business, the price tags often represent a strong proxy for demand, where strong demands generate strong prices and weak demands drive prices down. Basic economic theory!
According to John Burns Real Estate Consulting team, both groups of builders and agents implied that a small percentage of buyers had either cancelled their purchase contract or halted their home search due to uncertainty of the market. As a matter of fact, they all expect this number to increase until the end of summer unless there’s a significant change or event. For myself, by just following the news and trends on how our Fed & leaders are fighting inflation, I personally forecast the mortgage rate to continue rising.
Hey Chad, isn't this bad news? Not for me but for whoever is not ready to buy... mentally.
Do I feel uncertain about the U.S. Economy? Definitely.
Do I feel scared? Yep
Do I think it’s the end of the world? Absolutely not.
Even though I lived through the 2008-2009 housing market crash, I was way too young to experience and to understand the horrendous impacts it had. However, it’s not 2008 or 2009 anymore. We’re in 2022!! As a landlord and a Real Estate Investor myself, I’m taking a more optimistic approach at the purchase and investing stand-point.
As a landlord: I can expect leasing demand from my tenants to continue to stay the same or to rise for AT LEAST over the next 6 months while expecting the purchase demand shifting to renting s households seek relative affordability and flexibility. However, I’m not the only one! 74% of the SFR Rental operators surveyed in the first quarter this year reported Strong to Very Strong expected leasing in the next six months backed with strong current leasing ratings, record high occupancy, and rapid lease-up times.
As a buyer: This is a simple one! I have WAY less competitions in a low-demand market, which gives me much more leverage to negotiate a lower price with sellers. Since I’m also a licensed Loan Officer, I have no fear when it comes down to high interest rate because I can always refinance once the rate drops. As a matter of fact, the past couple transactions, all of my team’s buyers closed either below purchase price with a good amount of equity in their hands already. And they’re all first-time buyers! That’s why I said, your mental readiness is as important as your financial capacity.
Sadly, I’m not the only one thinking this way. While we’re all flooded with the bias media news for another 2007/2008 massive housing correction, huge investors & institutions are putting in flood of capital to aggressively purchasing more rental homes, new or resale. And you know which homes they’re targeting? Your dream homes based on the current trend and data analysis.
According to John Burns Real Estate Consulting team, both groups of builders and agents implied that a small percentage of buyers had either cancelled their purchase contract or halted their home search due to uncertainty of the market. As a matter of fact, they all expect this number to increase until the end of summer unless there’s a significant change or event. For myself, by just following the news and trends on how our Fed & leaders are fighting inflation, I personally forecast the mortgage rate to continue rising.
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