Agents continue to tell me that they have numerous buyers and sellers sitting on the sidelines because there is just too much uncertainty; in other words, FUD (Fear, Uncertainty, and Doubt) is paralyzing everyone.
So, I thought I’d provide some positivity… again.
Housing Continues to Appreciate!
The below chart showing housing appreciation from various sources was borrowed from MBS Highway – as two reports recently surfaced from CoreLogic and Black Knight that shows housing appreciated once again in April!
The reason is strong demand and tight/declining inventory, and there is no reason to believe this trend will change.
So, this is one more reason for all of us to ignore the “housing crash” predictions that continue to surface.
In addition, these numbers are in line with Habib’s and others’ appreciation predictions for the year of 5% or more.
Housing Appreciation in 2023 (Chart from MBS Highway)
Rates Will Fall
Rates always fall when recessions set in, and if we are not in a recession now, we will be very soon.
MBS Highway informed us of several great indicators recently: (1) Trucking Survey shows we are at levels we have not seen since the worst of the COVID crisis or the 2008 GFC; (2) Europe now appears to officially be in a recession; and (3) Initial jobless claims just hit a 20-month high.
Stephanie Pomboy recently tweeted this too: “…just as everyone has concluded the worst is behind us, a look at the history of the Leading Indicators and recessions shows the [Leading Economic Indicators Index] peaks 8 months before the recession begins…. We dropped -4.4% last Oct…which is precisely 8 months ago. Recession is NOW.”
Jeff Snider and many other analysts reminded us last week too that falling GDI (Gross Domestic Income) is a certain indicator of recessions, and GDI has been falling steadily.
So, I will repeat this again: rates will fall, and people buying today will be able to refinance into a lower rate.
(reminder: housing typically does well in recessions too, as I explain in this blog; 2008 was an anomaly)
(reminder #2: real estate is king of the asset jungle and always trends up, as this NREP video aptly explains)
So, what I am redundantly saying again: Buy now; Enjoy 5% appreciation – made better by the leverage factor**; Refinance into a lower rate when rates fall.
**Leverage Factor: A buyer puts down $100,000 on a $500,000 home, and that home appreciates 5% ($25,000); that buyer made/earned 25% against her $100,000 out-of-pocket down payment.
Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
