November 7, 2022

The real estate market is on everybody’s mind lately. From sudden jumps in value to just as unexpected drops, investors and homeowners alike want to know what to look forward to. From the blight of Covid on our total economy to a domino effect, toppling many industries, various factors have had an affect on the propensity of people to buy real estate.

In addition, soaring lumber costs have had their impact. Inflation has come on the heels of soaring unemployment despite a deluge of available jobs, and government interest rate tinkering to stop the hemorrhaging has followed. Knowing where to wisely invest your money has a great deal to do with timing.

This is why the analysis of chief economist Ian Shepherdson could be a dire warning for those looking to sell or a boon for those intending to invest. He predicts that the market will only demonstrate more of the same losses for the foreseeable future.

Pantheon Macroeconomics has stated that real estate is currently in a free fall with no end in sight. To further add to this dire forecast, Shepherdson can back this up with statistics. The past eight months have shown a continual decline for house prices among those currently for sale. This is devastating, as American home sales have not seen a slump of this magnitude since 2007, in the period just before the crash.

Shepherdson wrote that the drop could reach a staggering 20% in one year’s time. The total cumulative fall from January’s peak has reached 27%. Mortgage rates have slowed demand, and this will be felt until at least early 2023.

Those who might otherwise look to downsize would face larger payments for doing so and are opting to stay put instead. Only those who absolutely must move due to a job relocation or family needs are deciding to take the plunge. Median house prices are at their lowest since March 2022 at $384,800. Slowing demand is going to further drive prices down, perpetuating a cycle of lethargic movement and stagnant pricing.

Professor Jeremy Siegel of Wheaton University has stated that he believes this decline will be second only to that which followed World War II as a result of the Fed’s massive rate increases.

Sokol Group helps homeowners whose annual assessments are too high by initiating the property tax grievance process on their behalf. Assisting those who live in Westchester, Orange, and Rockland counties, we also work with those in the Hudson Valley. Reach out to us for more information of how we can be of assistance to you.

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