Economic and housing forecasts are as reliable as those of the Northern Arizona weather forecasts.
Economic and housing forecasts are as reliable as those of the Northern Arizona weather forecasts. While not pinpoint accurate, they are based on broad data sets and can be generally accurate. I cannot tell you the exact date and time in 2024 to secure the best buying or selling opportunity; however, one prediction I’m fairly confident about is that the longer buyers wait, the more they’ll compete, and the longer sellers wait, the better their prices may fare. The reason – two different aspects of supply and demand.
SUPPLY AND DEMAND WITH MORTGAGE RATES
A hot and exhausting topic of interest rates will continue to have massive impact on the market. We currently sit below the 25-year highs seen in October and are hovering near 18-month lows. The first chart shows projections on continued inflation activity, and many experts predict that if we can see year-over-year Core PCE, Personal Consumption Expenditure (inflation), below 2.5% then we could see the first Fed fund rate cuts, which will likely help mortgage rates come down as well. This could be as early as March but very likely at least by the May meeting. The Fed is still working on balance sheet reduction, as they were one of the largest buyers of mortgage-backed securities during 2020-2022. Experts predict they’ll continue their reduction strategies likely through the third or fourth quarter this year, which greatly impacts the supply and demand of mortgage-backed securities and could be one of the tools the Fed uses with the intent of a slow mortgage rate reduction vs. a plummet lower. Predictions for mortgage rates would be then a slow reduction of 1-1.5% in rates from now through the end of 2024, putting us possibly as low as mid-5%’s.
SUPPLY AND DEMAND IN HOUSING
Housing inventory remains incredibly tight. We did see an uptick in available inventory last year and experts expect a 15-20% improvement this year. The bottom line is that households are forming faster than we’re building, which will continue to strain the supply and demand of the housing market. Flagstaff, and its island housing market, is not exempt from this imbalance.
FINAL WORD
The current market is experiencing price reductions, seller concessions on buyer closing costs and a moderate pace with a longer market exposure time than we’ve seen in several years. We aren’t in an all-out buyers’ market but it’s the most buyer-friendly market in the last five years. If you are a buyer and find the right home, my advice is to secure it now and wait for the refinance opportunity in the months or years to come. The lower the rates go and as we head into spring and summer hotter buying and selling seasons, I anticipate the competition to heat up and prices to stiffen or increase. With hindsight 20/20, I believe most buyers would prefer the higher rates of today than the bidding wars of tomorrow for both emotional and logical reasons. FBN
By Chris Hallows
For additional information or to schedule an appointment visit ChrisHallows.Benchmark.us or call 928-707-8572. The Flagstaff location is 824 W Rte. 66 Suite A-3.
Chris Hallows is the Branch Manager & Sr. Mortgage Advisor of Benchmark Mortgage Flagstaff.
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