Chic vs. Geek: Summertime Silver Linings
/Amidst news of rising interest rates and supply shortages, there are opportunities to find silver linings in the housing market. Let’s take a look at a few examples:
CHIC (PEARL)
One piece of good news for potential buyers is that banks should get faster and more efficient at processing loan applications, especially with a sharp drop-off in re-financing due to rising federal interest rates.
Another positive is the job market. Prior to the pandemic, we were already experiencing high unemployment — and under-employment — and the COVID shutdown took it to record levels. Today, there are two jobs available for every unemployed American. That means more people with the potential to buy, especially first-time buyers.
And while supply chain breakdowns have left some store shelves empty, many retailers are overstocked in some goods, leading to sales and discounts for savvy buyers.
GEEK (KEVIN)
If the Fed's goal was to bring down prices, it’s working. Following spikes of 20% or more in the past 12 months, the volume of price adjustments off super-high prices is now up 69% compared to May 2021.
In a cooling market, buyers also have more choices and opportunities. Over the past year, we’ve seen as many as 10 bidders on a single property, making it hard to score the home you want. Now, inventory is up an average of 8% over last year in many parts of the country — including the Bay Area — which means prices could continue to drop.
And if you’d rather build your dream home — and who wouldn’t? — lumber prices have fallen roughly 56% off this year's highs, and copper is down 18.3%.
