Mortgage Minute October 23, 2023

Today’s Housing and Economic Environment

The Housing Market continues to show resilience as we battle through low inventory and higher interest rates.  We get asked all the time – “should we buy now or wait until next year”.   The message we are sending out to potential homebuyers is BUY NOW!  Right now, you can buy a home in the neighborhood and school district you want.   You’re not competing against 20 or 30 offers, as we saw in 2021.  If interest rates come down next year – you can always refinance that home loan to a lower mortgage interest rate.

Most economists do predict interest rates to come down in late 2024 and 2025.  Current home buyers may then decide to sell their current homes and purchase another property.  This will help inventory issues, but we could values go up as buyers compete for specific properties.  Making it tough to get your offer accepted.

The Economic Environment has been extremely hard to predict.  The Federal Reserve has increased the Fed Funds rate from March 2022 to September 2023.  They are trying to slow the economy down, which will slow GDP growth.   In July of 2022 we saw inflation reports climb close to 9%.  This past year we have seen that same inflation report come back down below 3.5%.  The Federal Reserve wants to see inflation rates drop to around 2%.  It is just taking much longer than expected for the inflation rates to come down.

The Federal Reserve has two main jobs:  keeping inflation at a rate around 2% while keeping unemployment from climbing above 4.5%.  One reason why we continue to see lagging inflation reports is because of historically low unemployment rates (currently at 3.6%).  When we have lower unemployment numbers – people tend to spend money on products and services, which causes inflation.

Some of the unemployment reports that I have recently seen – predict higher unemployment over the next two quarters.  This will help the Federal Reserve accomplish what it set out to achieve – a soft landing for the economy.

If you want more details on current Housing and Economic conditions – please reach out and I can send you my monthly “Mortgage Minute”.


David Krolikowski

VP of Mortgage Lending / NMLS #822204

Cell: 909-730-8566