Status Quo from the Fed: What does that mean for the Real Estate market?
Last week the Fed elected not to take any action on rates. There are surely reasons for that, and what, if anything, do those reasons mean for the NOVA real estate market?
The Fed is continuing in its quest to manage a “Soft Landing” of the economy as they attempt to slay the inflation dragon, which has proved to be a sturdy beast. This should be unsurprising since the cost push components of inflation driven by energy costs remain, as does the excessive government spending. Thus further rate pushes are likely necessary to bring inflation back within acceptable targets (3.7% annualized and .6% in August do NOT qualify). So a hope for moderation of rates towards the end of the year or in the first quarter are not in the cards. So if you are pausing your buying decision waiting for rates to come down, it’s time to change strategies. Ongoing rates in the 7’s means that the effects on the move up market and thus inventory levels will continue.
We do have some good news on the inventory front, as levels rose the last 2 weeks by 17% total! That still leaves us a long way to go but we’ll take it. That translates to a 1.2 months supply of homes in the region.
More and more companies are requiring their workers to return to in office work, at least on a part time basis, and we are starting to see what I playfully call “The Reverse Green Acres Effect”. More pedestrianly known as the Boomerang effect. Folks who moved out to the farm during the pandemic to take advantage of remote work are now considering a retreat to housing closer to their physical work places. Depending on the degree to which employers can wrangle their staff back into the offices this could make an impact on market trends.
Another thing you all have probably been noticing is a steep rise in homeowners insurance rates. They are up nationally 21% year over year and 35% the last 2 years! Ouch. This of course impacts budgets and affordability. And many insurers are pulling out of certain states because of wildfires and other natural disasters, and are looking for increasingly creative ways to deny claims. So having the right policy with the right insurer is more important than ever! It might be time for a review of yours. I’d highly recommend it. In fact I’m going through it myself right now, so if you are looking for some guidance feel free to reach out to me.
It’s a good life.
Chris
