Well, the market is shifting. We all knew this was coming, but the variation of predictions is pretty vast, so I would like to start by giving my educated opinion. Disclaimer: I do not have a crystal ball, nor do I claim to be able to predict the future. What I do have is access to data and an opinion formulated after processing that data.
Just last week I received a map from John Burns Real Estate Consulting showing the housing market risk index. In the Midwest, specifically Chicago and surrounding areas, we are at the low end of the risk index scale. Our CEO’s take on it “The Midwest is finally sexy!“ While demand was high for us, it paled in comparison to areas like the west coast. The reason for this is that when the work from home movement took over the world during the pandemic, we just weren’t the place that people were fleeing to.
Rates are rising specifically to help get a handle on inflation and give some value back to our dollar and certainly the feds we’re aware that this would impact the housing market, however, I have heard that rates will be going back down in the spring and most loan officers are offering FREE refinances when this happens.
Also, although there is some mixed communication about whether we are in a recession or not, it is important to know that that does not mean much in regard to the housing market. In 4 of the last 6 recessions, home values went up. In the 4th, home values went down less than 2%. The other was 2008. The impact in housing values in 2008 was caused by poor lending practices and people using their homes as ATMs. In both instances, lessons were learned and changes were made.
In short, it is wise to tighten the belt and make good financial decisions, regardless of the market to set yourself up for long term financial success, but the changes in rates and therefore demand do not indicate a market crash.
Make sure to check out my next blog to see how this affects pricing your home to sell.
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