What is going on with the market these days? In Nashville for the last couple years, we’ve seen a real estate market jacked up on energy drinks and jet fuel and we’re finally beginning to see signs of things returning to normal. There’s still a lot of uncertainty around inflation, interest rates, and a potential recession, and most economists don’t exactly agree on what the future holds, so let’s take a quick trip down a rabbit hole to see what’s going on. With interest rates rising at a rapid pace over the course of this year, that’s certainly making many people press pause with their plans. Why are the rates rising so fast? at the end of the day, is this is all about inflation. The Federal Reserve is making moves to raise the federal funds rate because they’re trying to lower inflation. They’re trying to slow down the economy. All signs point to rates continuing to rise a little more, but we’re not talking about mortgage rates doubling again. Then the question starts to come into play, what about a recession? That’s the next thing on the radar, Is there a recession around the corner? And this data from the Wall Street Journal is really helpful. In january only 18% of economists believed a recession was around the corner…now 63% believe a recession is coming at some point in the next year. And that starts to spark the question, what does that mean for the housing market? So as we look at the housing market, there’s a lot we can learn from history. And you’ve seen us share this graph before. But let’s keep in mind that a recession does not mean falling prices. In 4 out of the last 6 recessions in this country, home prices actually increased. Now, we all remember the housing crash in 2008, and I think that’s still fresh in our minds and people are fearful of that. But what we have to remember is we have a very different landscape right now when it comes to inventory, when it comes to lending standards, and equity. All of the factors that are driving the housing market in a different direction. Now what this graph does not mean is that we won’t have falling prices. But it does mean that it doesn’t happen every time. I think one thing we can also learn from history is that a recession more than likely means falling mortgage rates. Because in those same six recessions, mortgage rates have dropped each time. So what we’re feeling right now in Nashville is an overheated market where prices went up so rapidly during the pandemic, we’re now starting to see more of a shift in prices than some of the other markets around the country that may be holding steady. What this means is houses are staying on the market longer. The crazy prices that sellers were able to ask have been reduced down to more normal levels. Buyers are getting pickier because their mortgage payments are now much higher with the increased interest rates. We’re also not seeing an influx of new listings, so it’s still a seller’s market. And what we know is that prices are driven by supply and demand. And so this is continuing to put upward pressure on home prices. However, it’s also giving more opportunities for buyers. Now we also have other experts who are projecting slight price depreciation. So across the board; it’s a little bit up, a little bit down, depending on how experts are looking at it. And this is where using our local data becomes more important than ever. In Nashville and all the surrounding counties, home prices are still much higher than they were last year. The days homes are sitting on the market is starting to increase, and the amount of listings and homes that are selling is slighty lower than this time last year. If you’d like to see what homes are doing in your neighborhood, just reach out and we’re happy to give you an accurate snapshot. So, to summerize, buyers are still buying, sellers are still selling, and we’re continuing to buy and sell with our clients and with our own investment properties in this shifting market. You know where to find us if you need anything. This is Corey Fager with the Fager Real Estate Team – Love where you live!
@The Fager Real Estate Team www.NashvilleHomesETC.com www.Facebook.com/FagerRealEstateTeam 615-905-6256