FALL 2022 HOUSING MARKET FORECAST

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Real Estate

 

Yesterday, October 19, I attended a “Fall 2022 Housing Market Forecast” workshop.  It was conducted by Jeffrey Otteau,, a top New Jersey real estate appraiser.  Here is what he had to say:

We all know that inflation is having a large impact on the economy.  It is being done intentionally and is meant to slow down spending by the American people.  This is having a direct effect on the New Jersey Housing Market.  Currently mortgage interest rates are approximately at 7.2%.  Inflation is at 8.2%.  According to Mr. Otteau’s projection, this economic adjustment is necessary but will be short-lived and shallow.  He expects the economy to recover by 2024.  He predicts interest rates will be slashed within the next 18 months.

Inventory is still very low, and there are still active buyers out there looking for homes.  The “millennials” are ready to stop paying their astronomical rents and put that money towards a mortgage payment.

Between 2020 and this year, home prices went up 34%.  That is the largest increase ever in the industry.  Otteau predicts prices will go down by 10% before the market is corrected.  If you purchased your home prior to 2020, you would still enjoy a 24% profit if you went to sell, which is outstanding.  Understand that for every 1% interest rates go up, buyers lose their buying power by 9%.  This affects first time home buyers the greatest but will need to be factored into current market calculations.

The bottom line is this is positive news.  Where else can you earn 24% on an investment.   The primary reason we purchase our homes is for lifestyle and quality of life.  The investment is secondary.  If a home is on the market for $250,000 and a buyer has a $50,000 down payment, where is the money better invested?  If home prices are going up 5% (hypothetical) and your investment portfolio is going up by 5% (hypothetical), on your home you will earn 5% on $250,000.  Your portfolio will earn 5% on your $50,000 investment. 

Don’t let the media scare you.  Speak to an experienced, knowledgeable realtor to advise you on what options are best for you.  We are a wealth of information that goes way beyond “showing houses.”