Over the past two years rising interest rates have had a massive impact on the real estate market.

 For numerous years we saw record-low interest rates spur demand, which led to record sales volumes and impressive yearly gains in home values.

 Since rates began to rise, we have seen a sharp decline in demand, but somewhat unpredictably, we have also seen a decrease in the supply of homes that has been greater than the decline in demand.

 The combination of these factors has led to a market where we simultaneously have a low supply of homes, leading to stable and even rising home values, while at the same time, the cost to finance those homes has increased at a record pace, due to the 20- year high-interest rates.

 The questions we are now faced with are where are interest rates going to go next, and what impact will that have on home values?

 I learned a long time ago not to make my own predictions about the market. I like to say that my crystal ball broke in 2008 :)

 Luckily, there are companies that make it their business to make these types of predictions. Sometimes they are right and sometimes they are wrong, but my guess is that their guess is as good as any individual’s.

 Both Wells Fargo and Goldman Sachs have recently revised their forecasts regarding interest rates and home prices, along with many other economic indicators.

 They both predict that rates have peaked and that they will slowly fall over the next two years. They also predict that home values will rise slowly over the next two years.

 If that turns out to be true, anyone waiting for rates to fall before they move or anyone waiting for rates to rise to lower prices is going to be waiting for years.

 None of these predictions are guaranteed, and frankly, they are often incorrect.

 But, if you really want to own a home, or if you would really like to make a move from your current home, the experts are indicating with their predictions that the rates and prices won’t change much in the next few years, so waiting is not likely to change your situation.

 What direction do you think rates, prices, and the sales volume are headed?

Posted by Patrick Hake on
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