When Will the Housing Market Unfreeze?
Buyers can’t buy, sellers can’t sell. And this agony for buyers might not be eased within the next 12 months.
Buyers/sellers, mortgage agents and Realtors all wonder when rates and home prices will fall. When will it all end?
There’s a glimmer of hope that spring or H2 of 2025 could be that moment of real estate market resurgence. Yet, the other scenario isn’t so good. That outcome involves a slow death of the real estate market with more social decay in cities and big tax increases, while fewer buyers are available.
If we believe the most positive scenario suggested below, then Realtor’s have a golden opportunity coming. Are you going to be ready to capitalize on this, or will it slip through your fingers, leaving you with your current tough challenge?
Right now is the time to get serious about generating visibility, nurturing, capturing leads and using effective real estate marketing to solidify your pool of clientele, who see you as “the Only Realtor for Me.”
The End of the Locked In Effect
The “locked in effect” or locked down effect, is keeping homeowners in place in their homes until mortgage rates lower to where they can obtain a new mortgage at an acceptable rate. The issue is important given how high home prices and that they will likely climb further.
Sure homes are coming onto the market, but buyers still can’t buy. Even in the lively Florida real estate market, the only state with big inflows of new homebuyers and residents.
Is there a solution to the locked in effect? How about portable mortgages where the mortgage can be transfered to a new property without penalty or a new rate?
“This will take many years to work itself out. There isn’t a magic fix,” Michael Gapen, head of US economics at Bank of America, told CNN in a phone interview. “The message for first-time homebuyers is one of patience and frustration.” — via CNN Interview.
Gapen’s view is hardly encouraging for anyone, and not one the United States can afford. Time is running out.
The Solution is the Reverse of the Problem
It’s the FED’s high interest rate decision combined with continuous stimulus spending by the Biden Dem-led government that’s created this unpleasant situation. And rates might not fall quickly enough. The hidden truth lies in the Biden regime’s need for selling bonds and treasuries to fund the government because tax revenues are falling. So high interest rates are needed, otherwise who would buy all those “junk bonds.”
The housing market agony could conceivably extend through 2026 if the political status quo remains. One recent report from CNN suggests this problem could continue for 8 years.
Without lower interest rates and builder support and less land use regulations, new homes can’t be built. And new permits and starts dropped recently.
Most homeowners have mortgages and most of them must renew their mortgages by the end of 2026. As unemployment rises,
As I mentioned in other posts, everything rests on the Nov 8 election.
Yet, Realtors know the situation will get resolved at some point. High rates can’t last forever, but the FED could try to keep them higher for longer, through 2026 until the economy is fully immersed in recession. And many economists have stated the only way out of this is a recession — to douse the inflation flames with cold water.
When Will This Nightmare End?
Few housing market economists are venturing a certain prediction for fear of being wrong and looking foolish. Only the brave will hazard housing market predictions.
My best prediction is it will end next spring with a Trump win. If Biden wins, the economy will fall into a nasty recession. That’s because the Republicans will be disgusted and angry about another loss and Americans would be the same regarding their lives in the Democrat era with crime, high taxes, out of control spending and immigration.
Via the Senate and House, the Republicans would likely block anything Biden/Harris would propose going forward and this dog fight might cause significant damage to the economy — because small business would get hurt and big business would layoff tens of thousands, and put everything into AI. You may want to consider buying AI stocks like Nvidia or AMD as a hedge investment strategy.
A best guess scenario is that the residential real estate market will recover beginning in spring 2025, after a Trump presidential win.
Although Trump can’t force the FED to lower rates, he can cut stimulus spending immediately and pull funding out of economy-damaging Dem pet projects. This will end inflation right away, cut costly government job creation, so the FED would lower the rates. Trump would be more tolerant of inflation, with an eye on the big picture of fixing a broken country.
He’ll need unusual financial ingenuity to turn the US economy and housing markets around, but he has the experience. And on the other hand, who better to take the US through bankruptcy than Donald Trump? He has the most experience of anyone.
For Realtors, it’s all about preparation, because this awaiting market is the golden opportunity of a lifetime. The coming home sales volume will be staggering and you can win on volume alone. Positioning your offer at lower commission, better home marketing, to a targeted, enabled clientele will give you and your team record sales results.
Find out more about effective real estate marketing services with full support for all the marketing channels you use.
Call Gord at 416 998 6246 to discuss your market and challenges.
Many Americans will soon be on their own without Fed assistance and facing back rent and overdue mortgages. Cities such as Denver, Dallas, Houston, San Antonio, Austin, Salt Lake City, Las Vegas, Tulsa, Seattle, Boston, New York, New Jersey, Chicago , San Antonio, Austin, Colorado Springs, Salt Lake City, an Los Angeles may see growth in listings.
