And the Seer Says...Prices Up/Prices Down?

Thousands of U.S. Veterans are sitting on the sidelines presumably waiting for home prices to decline. That belief may be pricing those side-liners out of the market. As we indicated in a recent blog post here at VALoansMN.com we remain in a sellers’ market. Prices are still going up although certainly at a much slower pace than the off-to-the-races increases we saw in 2021-22. Will this market continue to see increases?

Anyone who predicts the future is playing a fool’s game but we can look at historical information for some sense of what “might” be happening today. Many doomsayers compare this recent robust housing market to 2006-2008 and the bursting of a housing bubble. We’ve discussed differences in previous blogs so we’ll refrain from some repetition. In 2006 there was a government push to make mortgages available to almost anyone with a heartbeat. That policy rsulted in what became known as subprime mortgages. Many of those mortgages went into default and the market was flooded with foreclosures and short sale homes. What happens when there’s an increase in supply and a decrease in demand? Winner, Winner, Chicken Dinner! Home prices fell off the cliff. That is NOT happening now.

We have seen some price reductions over the past year but that trend is now waning. In the Twin Cities area home prices have seen increases month over month of 1% to 4%. So, returning to the side-line crew, you may be waiting for little more than slight price increases. There is, of course, another major player in the housing market and that is mortgage loan interest rates.

We turn again to our crystal ball which, like all others, is VERY cloudy. Might we see a decrease in rates despite the FED’s recent rate hikes? There is historical data showing rates always decline in a recession. The powers-that-be in Washington are constantly saying we’re not heading into a recession. We can expect nothing different from those who want to remain in power. But a substantial number of those in the know say otherwise. This is an appropriate time to once again quote Brad here at VALoansMN: “you marry the house, you date the mortgage”. He of course means if and when mortgage rates decline from current levels you can break up with that loan and get another at lower rates. You don’t have to get rid of the home.

For more details on the current mortgage rates and all things home loans please call Brad at 612-240-9922.