Housing forecasters sure picked a great time to stop drinking.
Markets around the country are headed into confusing territory just as the spring homebuying season is about to get underway. And Fed Chair Jerome Powell just threw another spanner into the works.
Everywhere an analyst looks, questions abound.
First and foremost: What’s the real reason homes aren’t popping up on the market, and what will break it?
Weekly MLS PIN data reported weekly by Lamacchia Realty shows all new listings are severely lagging even last year’s inventory-choked environment. The typical early-March bounce in new listings was seen, but it looks more like the kind of bounce a large adult gets from a worn-out trampoline.
And while total residential inventory, combining condominiums, single-family homes and small multifamily properties, is tracking above 2022, we’re still about 500 homes behind the same week in 2021 and running with only half the number of properties for sale at this time in 2020, just before the COVID-19 pandemic struck.
Some corners of the housing-verse blame the “mortgage rate lockdown” – essentially, that buyers are suffering sticker shock after years of paying 2 percent interest on their loans or feeling uncertain about whether they’ll be able to get a better deal later this year if the Federal Reserve decides it’s whipped inflation and lowers rates.
Others, perhaps more believably, blame affordability. In their eyes, prices were bid up so far in recent years that, combined with high mortgage rates, the middle class can no longer realistically afford the monthly payments on a new house.
And where do Baby Boomers fit into the equation? Are they nesting, content to enjoy the houses they put so much sweat equity into and able to live independently for longer thanks to advances in health care and healthier lifestyles? Or are they, too, facing an affordability crunch or sticker shock?
And how much does the uncertainty and frustration of homebuying in a low-inventory environment factor into this when every home seller – save the dead ones – needs a new place to rest their head once the sale is concluded?
Uncertainty in the larger economy has always helped suppress people’s willingness to move, as well – could that be a factor? Or should we discount that hypothesis in the face of still-strong jobs and wage growth data – the economic indicators, along with gas and food prices, that most of us encounter in our day-to-day lives?
And what of Chair Jerome Powell’s ransom note Tuesday? How else to interpret “[i]f the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes” other than a Volkeresque determination to PIT-maneuver the economy into a recession?
It’s all adding up to a muddled picture, which often means we shouldn’t expect much beyond a holding pattern.
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