As mortgage rates continue to rise, eventually the housing market will evolve from its current crazy pace to one that is much more tolerable.
The Coming Change-The sharp rise in mortgage rates from 2.65% during the first week of January to 3.09% today is just the beginning of rising rates.
The Los Angeles Lakers reached the playoffs 10 years in a row between 1995 and 2004. They hoisted the Larry O’Brien Championship Trophy three times between 2000 to 2002. The team was stacked and included Kobe Bryant, Shaquille O’Neal, Derek Fisher, and Rick Fox. What happened in 2005? Shaquille O’Neal was traded to the Miami Heat and Derek Fisher signed as a free agent with the Golden State Warriors. The Lakers won only 34 games and missed the playoffs for the first time in 11 years. In sports, phenomenal teams do not last forever.
Housing is in the midst of its own playoff run and has been a Hot Seller’s Market since June of last year, 9-months straight. It is the longest since the 16-month streak that ran from March 2012 through July 2013. What happened in the summer of 2013 to end the run? The market decelerated because of higher mortgage rates.
AN IMPORTANT NOTE: It will still be a Hot Seller’s Market. This is NOT a shift to a Buyer’s Market. This a shift from a housing market that is currently nuts, appreciating at about 1% per month, to a regular Hot Seller’s Market with normal, 4% to 5% appreciation per year. Sellers who overprice will sit and languish on the market.