What is going on?

With US equities and bonds having their worst first five months of the year in half a century, it is tempting to say that nothing is working in the financial markets.  There seems to bad news everywhere including the fact that while working from home means skipping the commute, it does come with a cost.  When you consider rising energy costs. Electricity costs in April alone were up 11% year over year, according to the Bureau of Labor Statistics’ Consumer Price Index.  I won’t even touch on the price of gas and groceries. 

The good news for homeowners is that real estate is working!  On May 31, we learned that U.S. home prices between March 2021 and March 2022 soared 20.6%.  That’s the biggest 12-month uptick ever recorded.  Yes, ever! 

I’ve been hearing for a while from clients “I want to sell due to my home’s value being high and wanting to upsize/downsize, but where would I go?  There is still nothing on the market.”  Here is the reality:

• In 2021, there were 6.9 million home sales in the U.S. In 2020, 5.64 million. This same trend is continuing in 2022.  Obviously for more homes to sell, more need to be on the market. In fact, between March 26 and May 7, nationwide inventory levels rose 10%.
• The issue isn’t that fewer homes are for sale, they are just selling quicker.  You are wise to choose a savvy realtor that is quick on their feet and offers relevant, grounded advice when buying a home today.  In this market you should be just as choosy about who is helping you buy a home as you are about who is helping you sell one.  Neighborhood knowledge, relationship with other realtors, savvy negotiation skills and having your finger on the pulse daily is vitally important.
• If you are thinking about buying, the time is now as mortgage interest rates are still historically low and most, including me, think home prices will continue to rise.  To put things in perspective, 40 years ago rates were at about 17%!  If rates were 17% instead of 2.5% in December, the sound bites would be “Buy now with historically low rates at around 5%” instead of “Rates are high at 5%”. It’s about perspective and who you listen to when forming your opinion.