Hey there, friends!
We're back at it again, cracking the code on all this financial stuff. Remember, we're in this together, breaking down the fancy jargon and making this whole money thing make sense. Swing by my Twitter(X) @Lumberhawk- I keep the conversation going there with more insights and real-time updates.
That being said, today, we're going to talk about the housing market...
Navigating the world of economic forecasting, especially when it involves mortgage rates, feels a bit like trying to sail through a storm at sea. The aftermath of the COVID-19 lockdowns and some interesting moves by the government have only added to the challenge.
The latest whispers from the forecasting world suggest that we might see the storm calming a bit. The markets are hinting at a gentle decline in mortgage rates over the next 2 years. This hope is pinned on the anticipation that the Federal Reserve will likely start cutting rates, which could soothe the turbulent bond market, leading to a small dip in mortgage rates. This will likely increase demand at least slightly.
As of now, the average rate for a 30-year fixed mortgage is hanging around 7%. Looking ahead, the crystal ball at Fannie Mae is showing a drop to 6%, Wells Fargo's are a tad more optimistic at 5.8%, and the Mortgage Bankers Association tops the optimism chart with a forecast of 5.5% by the end of 2025.
But let's hold our horses! These forecasts come with a pinch of skepticism due to past misses from all of these organizations. Much of this will depend on how sticky inflation is and how the national debt burden is being addressed (printing/debasement most likely).
Even if rates do drop slightly, our journey towards affordable housing seems a bit rocky for 2024 and 2025. High home prices coupled with stubbornly high rates are likely to keep us on our toes for at least the next several months. Inventory has been low throughout the majority of the country, and government spending (currency printing) has been high. Plus, with inflation and job numbers throwing curveballs, we might see a bit more pressure on rates than we'd like. But hey, on a brighter note, even with these challenges, there's an expectation of continued wage increases as well as more action in the housing market, even if the rates don't make a dramatic plunge.
Personally, I anticipate that overall affordability will increase over the next 2 years due to wage growth, rate cuts and government subsidized buyer incentives, albeit home sticker prices may also go up due to inflation/debasement created appreciation and increased demand. Over the next 10 years, I believe Bitcoin will begin to consume a material portion of the residential market as investors transition some of their portfolio to a less risky store of value asset (litigation/lawsuits). This would create more supply and would be really great for the next generation trying to buy their first home in the near future, as it will bring home values closer to their utility value rather than their current status as a safe haven from dollar debasement (at least in part).
If you’re considering a home purchase in the near future, I wish you the best of luck and I hope that market conditions improve for you soon.
Well, that's a wrap for today y’all. If you found this helpful or it got you thinking, why not hit that 'like' button and share it with your buddies? The more we share, the more we all learn.
Disclaimer: The goal here is to educate and entertain. However, keep in mind, this isn't financial advice. I'm a regular person like you, sharing my perspectives based on my personal research and experiences. Always do your own research (DYOR) and make your own informed decisions.
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