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Resilient Economy Brings Uncertainties to the Market

Resilient Economy Brings Uncertainties to the Market

A couple of months into the year and at the doorstep of the spring buying season, the market is still showing some uncertainties mostly due to a surprisingly resilient economy. In several different segments of the economy the last few months brought good news, increasing the likeliness that the Fed will continue to adjust interest rates upward to keep inflation under control. Let’s review all that is happening as reported by the California Association of Realtors.

Based on Realtor surveys created by CAR, most real estate agents have seen a surge in both the number of listing appointments they attend as well as actual listings taken. The number of new escrows opened in early February rose as well, mostly due to the decrease in interest rate we saw in January. Many of the Realtors I work closely with have reported more buyers getting off the fence as they got tired of waiting for interest rates to adjust and are more concerned about getting into a home than timing the purchase perfectly. While some homes, especially those priced higher than the current market can bear has seen almost no interest, properties priced well have seen multiple offers return. As the month of February went on, interest rate has moved upward again, decreasing the number of new mortgage application almost instantly. Last week, interest rates were at 6.5%, the highest since last November. While the increased interest rate impacts affordability, with so few homes on the market, buyers will still experience some competition though nothing like what we have seen in the last few years.

The US economy closed out the 4th quarter with a 2.7% increase in GDP and started the new year with very strong retail sales. While some industries laid off employees, others continued to add a surprising number of new positions to the job market.

New home builders finished their 4th consecutive month with increased sales, registering the most demand since March of 2022. The largest growth came from the South, though other parts of the country are still seeing new home builders struggle to find buyers for their standing inventory.

Both personal income and saving rates have increased slightly in the last month though the higher prices continue to impact each family’s disposable income.

What does this mean for you? Make well informed, solid financial choices, and if you are considering buying or selling real estate, reach out to your local Realtor. They are ready to help you!

This article is written by Tunde Baker, Senior Vice President at RE/MAX Grupe Gold. Tunde is a broker with over 21 years of real estate experience. Information was provided by Freddie Max and California Association of Realtors.