Wow, hot off the presses! Real Estate Celebrity Agent Kristen Jordan, former Bravo Star, and Million Dollar Listing Agent just went on Fox News and predicted a “slight correction” in the real estate market.
On the Neil Cavuto show, Jordan said the US hasn’t seen sub 5% rates since the 1950s and that todays’ higher interest rates are likely to be around for a while. In addition the “Fitch Ratings Report”, a real estate data firm, reported that US homes were overvalued by 11.1% Nationwide with 90% in Metro Areas. Jordan did not see more than a correction though as inventories are still very tight.
Glenn Kelman, CEO of Redfin also had “Soft Summer” prediction. Kelman said some markets are dropping and will continue to do so, citing Texas and Florida primarily. The reason is inventories are rising and days on market are getting longer. What is holding up the correction is the Sellers’ resistance to lowering the home price to meet buyers values. Luxury Homes are a bit different though. The rich don’t care about interest rates because they are rich!
So are they right? I think there is credibility and merit to the majority of what was said. In California, however, we are tempered by a few things that won’t allow prices to drop much, if at all.
1 Demand far exceeds supply and is likely to for many years to come.
2 Some areas are at maximum capacity with little or no room for new housing.
3 Population is increasing annually with need for more homes being constant.
My outlook for the Summer is similar. Yes we are seeing a softness emerging in the markets now. It is a good time to get off the fence if you are serious about buying or selling a home. Come August, with the implementation of the Real Estate Settlement Guidelines, it’s unclear exactly what’s going to happen then. Alas that story is for another post!