January 25 2023
I am certainly not an economist, and I only modestly invested in the equity markets. I am real estate to the core. We are within 90 days of Tax Day, and I have never welcomed it so much!
The Federal Reserve (Fed) is fighting inflation with resolve. The rapid increase in interest rates has impacted all investment categories, including residential real estate.
It seems to be a game of "units vs. price." Reviewing markets around the U.S., we are experiencing a slow-down in the velocity of our markets caused by:
A few slides from NAR's Chief Economist Lawrence Yun's recent presentation, U.S. housing fundamentals remain solid.
Inflation seems to have peaked around 9% in June '22. We have seen a steady decline to sub-7% inflation in December '22. By the time we reach Tax Day, we'll be nine months post-peak and the forward indicators of inflation for June '23 should be clear to all – especially to the Fed and the equity markets.
This outlook as of April '23 to the peak inflation anniversary of June '23 coincides with our traditional spring selling season.
Jumbo mortgage rates peaked briefly, above 7% in November '22 and are flirting with falling below 6% as of this writing. Jumbo mortgage rates starting with a five (5%) remain historically low.
I predict that by April 15th, the velocity of the U.S. housing market will return to a seasonally adjusted rate of above 5 million homes. A respectable, if not healthy, market, but certainly not 2020 or 2021.
So, I have never wanted Tax Day to get here in a hurry like I have in 2023.
Mark McLaughlin serves as CEO of McLaughlin Ventures and M&A Advisory at WAV Group.
To view the original article, visit the McLaughlin Ventures blog.