Explore expert predictions on Federal Reserve interest rate cuts and how they could affect the 2023 housing market in our latest blog post!
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Hey there, future homeowners and real estate enthusiasts!
If you have been waiting on the sidelines, wondering when to make your move in the US housing market, you are not alone.
The word on the street is that everyone eagerly waits for the Federal Reserve (the Fed) to give a sign, or more specifically, to cut interest rates.
Let us dive into what the experts say about when this could happen and how it might affect the housing market.
What is Up with the Housing Market Now?
Okay, so first things first, the housing market has been like a roller coaster lately.
Remember the good old days at the beginning of 2022 when the average rate for a 30-year fixed-rate mortgage was around 3%? Well, now it has shot up to over 7%. Yikes!
This means that many first-time homebuyers are thinking twice before jumping in.
Moreover, those who already have homes with super-low rates?
They are holding on tight, reluctant to sell and buy again at high rates.
Could Home Prices Drop in 2023?
After a period of prices going up like crazy (we’re talking about a 45% increase in two years!), the growth is expected to slow down. Some cities like Dallas and Las Vegas are great markets for homebuyers next year as prices might drop.
Some experts are whispering about sharp declines coming soon, but others believe it will not be like the 2008 crash (fingers crossed). So, we might be looking at a cool down, but not a full freeze, with some areas even seeing values rise by over 10%.
What the Experts are Predicting
So, the million-dollar question is, “When will the Fed cut the interest rates?” Well, we have some predictions from the experts, and here is a simple breakdown for you:
Before the end of this year – Bob Michele from J.P. Morgan believes the Fed might reduce rates seeing the current economic slowdown.
February: Preston Caldwell from Morningstar is eyeing February for a potential rate cut to support economic growth.
Not before April 2024 – David Einhorn from Greenlight Capital thinks the market is too eager and does not see a cut happening until 2024.
May 2024 – Diane Swonk from KPMG US bases her prediction on needing to see a consistent drop in inflation first, projecting May 2024 for the first cut.
Should You Keep Your Eyes Peeled?
If you dream of buying a house, keeping an eye on the Fed’s moves is wise.
While a cut in the Fed’s rates does not mean mortgage rates will drop instantly, they tend to move in the same direction over time.
Havingg when the first rate cut might happen could help you plan your big move.
So there you have it, folks! While we see some mixed predictions from the experts, the general vibe is cautious optimism.
The rates are high now, but they will not stay that way forever.
Moreover, while we wait for the good news, why not start window shopping for your dream home in the best markets of 2023?
After all, being prepared never hurt anyone!
Remember, the housing market has its ups and downs, and the best we can do is stay informed and ready to seize the opportunity when it comes.
Stay tuned for more updates, and here is to hoping we all find our dream homes soon!