Happy New Year! I hope everyone had a safe and happy New Year’s Eve. As a card carrying old guy, I didn’t wait up to see the ball drop. I’m also a tea toddler, and I haven’t had any interest in alcohol for the past decade. At this point in my life, alcohol has negative marginal utility. My body doesn’t like it, and I don’t care to spend any money on it. I have no issues being around people who drink, it’s just no longer my thing. I don’t see that changing this year. And with that, let’s get onto a few relevant predictions:
1) Interest rates will stay elevated. The days of pandemic driven low interest rates are well behind us. As of this morning, January 1 2025, the average 30 year rate is 7.01%, although with good credit you can still get rates in the 6’s. I don’t think it’s going to get too much worse before it gets better, but I also don’t think it’s going to get a whole lot better. Rates in the mid 6’s will be attractive in 2025. Rates in the 5’s don’t seem realistic to me, but one can always hope.
2) Inventory will stay low. So many Americans are married to their interest rates from the pandemic, we just aren’t going to see a lot of options for home buyers. Low inventory typically means higher prices as properties get bid up, but with elevated interest rates we won’t have as much demand. I’m anticipating a relatively balanced market this year.
3) Spring will be good in the real estate market. It always is. That’s when the most buyers and sellers come out of hibernation. Interest rates should still be relatively attractive.
4) I’m expecting some economic disruptions by the summer. Inflation will likely start to kick in from the tariff policies, which means mortgage interest rates will probably tick up even more before they settle back down into the 6’s.
5) Buyers may have their feet to the fire this winter, if the holiday season is any indication. I saw a lot more activity in the market this holiday season than I have in years past. I think that bodes well for a seller’s market conditions to persist this winter season with good demand and little inventory.
I hope you have a happy and prosperous New Year!
*** Thank you for reading my blog! If you or any of your friends and family ever have any real estate questions, please feel free to contact me at andyfalk2112@yahoo.com or 415-250-8025. I’m always happy to help!