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With so much uncertainty around the economy, is it a good time to buy or sell a home? I want to share an enlightening article that one of my highly respected colleagues, Leonard Steinberg, published in his daily newsletter to the national Compass agent community.
Many months ago I predicted that the combination of super-tight inventory, combined with a massive surge in activity after pent-up demand broke free in 2020/22, combined with an under-built environment of millions of homes in the US, could lead to further price escalation, regardless of higher rates.
A few days ago The S&P CoreLogic Case-Shiller National Home Price Index, climbed 0.4% in March compared with February on a seasonally adjusted basis. On a year-over-year basis, the index rose 0.7% in March, down from a 2.1% annual rate in February, the smallest annual increase since May 2012. The 10-city index fell 0.8% over the year ended in March, following a 0.5% increase in February. The 20-city index dropped 1.1%, after an annual gain of 0.4% in February. For both indexes, it was the first annual decline since May 2012. Miami had the fastest annual home-price growth in the country, at 7.7%, followed by Tampa, at 4.8%. The weakest market was Seattle, where prices fell 12.4% on an annual basis. A separate measure of home-price growth by the Federal Housing Finance Agency also found a 3.6% increase in home prices in March from a year earlier.
The Case-Shiller index measures repeat-sales data on a 2-month delay and reflects a 3-month moving average. Homes usually go under contract a month or two before they close, so the March data is based on purchase decisions made early this year or late 2022.
Bottom line: the price re-balancing in many parts of the US seems to be slowing. And we may be entering a period where the limited inventory that is available sells for...more. And this is during uncertain, more challenged economic times with higher interest rates. Now imagine what happens when:
Under-supply combined with rising demand = price hikes! It's the simplest theory of economics 101. Buying now with higher interest rates - and refinancing later when rates come down a bit - may be cheaper......