Why there doesn’t seem to be a market crash coming any time soon.
Our spring 2022 market has started off great, but is a recession on the horizon? Interest rates are on the rise. Typical 30-year mortgages are in the 4% to 5% range, and inflation is still at roughly 8.5%. The best way to tell what’s going to happen in the coming months is to look back at 2004 and 2015, when interest rates also approached 5%
2008 to 2011 was, of course, a recession caused by the housing market crash. That crash happened because of subprime mortgages and shady investment bundling strategies, which are unlikely to happen again soon. The Federal Reserve had to raise rates in 2012, and when they did, the housing market came back very strong with appreciation rates of 12% to 17%. The key takeaway is we’re not seeing any evidence that climbing interest rates will cause our market to crash.
What we do see are a lot of reasons our market will continue to be strong. We have high-paying jobs, highly constrained inventory, low unemployment, companies asking employees to come back to the workplace, and major demographic shifts like millennials. Our prediction is that both interest rates and home prices will continue to rise.
