Housing Safety Net
On the heels of the announcement of the Trump government’s rates this week, the worldwide shares and the uncertainty rose about where the economy is going.
“The stock market has had its biggest losses since 2020. The expected effects of the rates of the administration, together with general economic uncertainty, will mean that companies will hire and private individuals and families will spend on expenditure,” Lisa Sturtevant, the main economist at Clear MLS“ said in a statement.
For Stella this means that Friday’s canceled deal on Friday might just be the tip of the iceberg, because more potential home buyers are starting to weigh economic risks with their desire to buy a home. That said, he believes that this is still a good time to buy real estate for everyone who is able.
“I don’t know much about global markets, but I do know that real estate is a safe port investment. So if the times are uncertain, go buy real estate,” he said.
In the larger Boston area, Stella expects the housing values to rise by 2% to 5% this year, which he said was considered normal price rating prior to the COVID-19 Pandemie.
“It’s a safe place to place your money,” said Stella. “Compared to the rates, I just think that real estate will be a more valuable investment for your dollars.”
Although some consumers can agree with Stella, there are numerous conflicting factors that contribute to the question of whether they eventually take the leap to buy a house.
On the one hand, the cooling economic conditions caused by this week’s announcement leads the rates to an increase in uncertainty about job security and inflation. This ensures that some home customers, such as Stella’s customer, think twice before they buy a house. But these same slower economic conditions have also ensured that the mortgage interest rate achieved some of their lowest levels of the year.
Because many buyers are on the sidelines waiting for lower rates, it is still to be seen whether the last decreases cause transaction levels to jump.
“The rate announcements have lowered the mortgage interest rate, but those lower rates can be cold comfort for potential buyers who are increasingly concerned about job security and inflation,” said Sturtevant.
Opponent opinions
Brian Huskey, the broker owner of ERA American real estateRecognizes that buyers in some markets can be heavily influenced by the stock market. But in his market market, Montana, he said that consumers like to welcome lower mortgage interest, despite the macro -economic uncertainty.
“Today I had phone calls of three or four buyers who are really enthusiastic about the rates that come down,” said Huskey. “The market here is frozen all winter and I think these rates help it to get to a point where it can really open again.”
Huskey added that there are many owners of small companies in his market that feel optimistic about the prospect of lower interest rates. This should make it cheaper for them to borrow money and grow their businesses.
From in South California, Michael Nourmand, the president of Nourmand & Associatessees things a bit different. Unlike Huskey, he is not so certain that lower rates will be sufficient for a wave of consumers to buy houses.
“Buyers are used to the rates that fluctuate in the reach of 6%, and they make a move or not, so unless they come down a lot, I don’t see much changing,” Nourmand said. “It is still very difficult for movers who may be in their current home with an interest rate of 3%.
“In addition to the higher rate, they also have transaction and relocation costs to consider, and those insurance costs for a new policy are more expensive than extending their current policy.”
In Dallas-Fort Worth, Texas, houses flew off the market with several offers during the peak of the pandemic. That is no longer the case, and Brixstone real estate Agent Mandy Nichols would like to welcome an influx of buyers.
“I remember that I couldn’t find a house in Colleyville, but now we have more than 80 on the market and the days on the market are almost two months,” said Nichols. “I pray that the market will pick up this spring. The market is now just weird.”
Although Nichols would like to see more buyers, she is not sure how the last wave of economic uncertainty will influence consumers in its area.
“I don’t know if people just keep a little to see what is happening, or waiting for school to get out, but it’s slow now and I am not sure if it will improve,” said Nichols. “I’m just a bit stunned by the whole thing.”
Nichols said that during the spring break, during the spring break, she saw an increase in the activity, but the activity has recently fallen again, even with the decrease in mortgage interest.
Mike Pappas, the CEO of The Keyes companyIs also uncertain about how things will take place in the housing market, but he is convinced that sales transactions will continue to take place, even if they are not at the level agents and would like to see brokers.
“We see taking over the changeable life and those who hesitate to sell cannot wait anymore,” said Pappas. “We see the rising inventory and more individuals put their property on the market because of death, divorce, babies, marriages – all the things that happen in life that are the real reasons why people buy and sell.”
Hobbled Construction Market
In addition to indirect influence on the current level of economic uncertainty experienced by home buyers, the tariff announcement of the Trump administration is expected to be directly influenced by the new -build market.
In South California – which is strongly affected by the forest fires in Los Angeles – Nourmand anticipates that rising raw materials prices will become even more difficult for builders consumers than in other parts of the country.
“You have the rates, which is a way to make things more expensive, but then you have entire cities – possibly hundreds of thousands of houses – that must be rebuilt at the same time, so that the question is asked, so at the moment it certainly seems that there will be a wave of prices,” Nourmand said.
While residents want to rebuild their houses and their lives in places like Pacific Palisades, Nourmand believes that these rising costs will influence how many people decide to build new houses.
“The demand for land will fall,” he said. “Construction costs will rise, and to convert time lines from 18 to 24 months, there is so much uncertainty about how many things will cost by the time the project is done.”
Stella also sees a world where some existing homeowners, who have outgrown their houses, choose to sell instead of renovating or adding – a reversal of what many did when interest rates first started to rise in 2022 and 2023.
“The costs of wood, steel is all expected to rise, and those costs will be passed on to the consumer. So if I have a young family and need more space, instead of an addition, I can actually just buy another house,” he said.
Although it is still a bit early to understand the full impact of the rates, Stella said he heard that most builders in his area quote homeowners between $ 700 to $ 1,000 per square foot for an addition.
“It’s just too expensive, but it can help to add some inventory to the market, so it may not all be bad news,” he said.
