I also wanted to share an interesting thought (not a prediction, just a random speculation) regarding the housing market. As we all know, just as I predicted back in April 2022, the housing market hasn't fallen, despite rising interest rates. My speculation at the time was that rising rates would cause people to cling to their 3% mortgages, so while demand would fall from rising rates, supply would also fall, which would tend to counteract falling demand. That's exactly what happened... then I had another thought a few months ago that went something like this:
- When rates finally do start to fall, people who have felt "trapped" in their mortgages may finally rush their homes to market.
- This will, of course, increase inventory.
- Depending on how much pent-up supply lies in the wings, there's a chance that falling rates could again trigger the inverse of what everyone is expecting: Instead of rising prices, it's not outside the realm of possibility that lower rates could lead to a supply glut, as "trapped" would-be sellers finally see a way out -- which would then trigger falling prices.
Again, that's not a prediction, because there's no reliable way to measure how many people will list their homes in a falling rate environment -- so I don't have enough data to make that prediction. But I think it's at least a possibility that the housing market once again does the exact opposite of what "everyone" is expecting. If it were to play out this way, I still wouldn't expect a housing "crash," but a significant rise in supply brought on by lower rates could at least turn this into a buyer's market. Again, not a prediction, just a random thought.
Not much to add beyond that. Trade safe.
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