The Federal Reserve Beige Book Latest Tells Us What We Already Know
We are NOT in 2008. The housing market is surely not where we'd like it to be and certainly the economics of inflation have taken the wind from the sails of housing in a very short period of time. Yes, prices have begun to adjust in many MSA's, but those downward adjustments pale by comparison to the appreciation accrued between the 2.5 years spanning 2022 through Summer of 2022. In the time frame referenced above the national average for appreciation was north of 40%, so when prices drop by 10%-15% in response to inflation, the sky is not falling. The price adjustments also are not being caused by over-supply, which was exactly the case in 2008 and the ensuing couple of years. In fact, despite the decline is sales (34% year over year) the housing inventory nationwide remains near historic lows.
In the most recent edition of the Federal Reserve Beige Book (an economic overview from all 12 Federal Reserve Districts published 8 times per year), they describe how the effects of inflation and the rate hikes intended to combat it have cooled the market. The combination of the reduction in buying power resulting from significantly higher rates has removed Buyers from the market, and has simultaneously kept a lid on sellers who simply chose not to list. The culprit of this market correction is self-inflicted and is very simply the result of a nearly unprecedented interest rate hike that occurred in an extremely short period of time. In fact, 2022 marked the first time in 50 years where mortgage interest rates increased by 100% or more in one calendar year. Thus far the impact of those increases by the Federal Reserve Board have had little to no effect on inflation, but has essentially stopped housing in it's tracks. When one considers the impact of real estate and related industries on the overall economy the question remains how long this may continue.
So, for those who missed it earlier let us
repeat, this is NOT like 2008 for many reasons, but that doesn't ease the pain
for potential Sellers knowing what may lie ahead or potential Buyers who've
seen the lowest mortgage credit availability in two decades. Reaching out
to those sellers who may not want to jump through the hoops of listing right
now by posting your Buying and Renting needs on PropertyGuerilla.com is how we
differ from traditional real estate websites. Creating a competitive edge
that focuses on finding inventory where there's not enough to be found may just
be one way to keep ahead of the crowd. The best deals are often the ones that
no one else knows about.