This morning I’m doing several radio interviews across the nation. We’re talking about Fannie Mae’s predictiction of a mild recession in early 2024. With rates hitting a 20 year high, increased property taxes, and soaring insurance premiums, affordability has become the name of the game in all areas of life, not just real estate.
The Mortgage Rate Rollercoaster
First off, let’s talk numbers. As of June 2023, a staggering 82.4% of homeowners have a mortgage rate below 5%, and 62% are enjoying rates below 4%, according to Redfin. Even more notably, 23.5% of homeowners have a mortgage rate below 3%, which is almost the highest proportion on record. But those days are fading fast. CNBC reports that mortgage rates are heading towards a staggering 8%. That’s not just a blip; it’s a seismic shift that’s affecting everyone, from first-time homebuyers to seasoned investors.
The National Picture: A Mild Recession on the Horizon?
Fannie Mae recently doubled down on their prediction that we’re headed for a “mild recession” in 2024. Home sales are at lows we haven’t seen since 2011. So, what does this mean for the housing market? In a nutshell, we’re facing “renewed headwinds,” as Fannie Mae puts it.
Consumer Behavior: A Balancing Act
Fannie Mae economists believe that personal consumption is at an unsustainable level relative to incomes. This is a concern everywhere, as residents across the country are grappling with high living costs, from groceries to gas prices. Credit card debt in America is now over $1 Trillion Dollars.
Investment Opportunities: The Silver Lining
Despite these challenges, there’s a glimmer of hope. Both the MBA report and the RCN Investor Sentiment Survey show optimism around housing demand, especially from first-time homebuyers. For investors, this could mean opportunities in cities that are currently undervalued but have growth potential.
The Future: Adapt and Overcome
With mortgage rates soaring and economic indicators pointing towards a slowdown, it’s easy to get discouraged. But here’s the thing: challenges also bring opportunities. Urban infill and rental properties might become more attractive investment options.
Get the Inside Scoop
Want to dive deeper into what investors are thinking? I’ve got just the thing for you. Download a copy of the RCN Investor Sentiment Survey right here.
So there you have it, folks. The market is always changing, but if you keep your ear to the ground and adapt, you can make it work for you. Until next time, keep investing smart!
Feel free to reach out with any questions or thoughts. I’m always here to help you navigate the ever-changing world of real estate.