There’s been much talk recently about a slowdown in the market. Some experts are calling it a “housing recession”, a new term that defines a declining housing market.
Sellers are no longer getting multiple, non-contingent offers within hours of hitting the market. Interest rates have soared to 5.5%. It’s an absolute free-fall, right? Of course not.
I think it’s helpful to frame things with a slightly different perspective. Has our market slowed down? Yes, of course it has. Has it crashed? No, not at all.
I think a speeding car analogy explains it best.
In 2021, 3% interest rates boosted our market to over 100 mph. We were going way too fast but it was an exhilarating ride for sellers.
Early 2022, as prices reached record highs, buyers eased up on the gas pedal to 80 mph. Still way above the speed limit but noticeable slower than before.
Mid 2022 the Feds pumped the brakes and interest rates climbed. Record high prices combined with higher rates slowed buyers down to 60 mph. Ah, finally we were going the speed limit.
As summer ends, there are still plenty of motivated buyers. They just want to drive safely and are cautious about overpaying. It feels like we’re moving around 50 mph.
Less than the speed limit but no traffic jam either.
So here is my perspective. If the market kept going 100 mph we would have been setting ourselves up for a crash. I doubt Geico would even insure this driver. Slowing down from 80 mph to 60 mph to 50 mph may feel like a housing recession but in reality we are still moving at a healthy speed.
We’re driving at a pace where we can see the scenery go by and not every transaction feels like a white-knuckled adventure.
Whether you are looking to buy or sell, you will still find plenty of opportunities in this market.
