2023 was a challenge…To say the least.?The spike in mortgage rates pushed both buyers and sellers to the sidelines, leading to historically low inventory levels, and resulting in the fewest residential transactions since 1993.?Lenders faced liquidity problems and tightened lending standards as a result, which further complicated the problem.?
Fortunately, brighter days appear to be ahead.
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HERE IS WHAT WE ARE WATCHING IN 2024:
--Fed Action/Interest Rates.?The fed has indicated that the further heightening of rates is off the table, and they’re now in a position to start reducing rates “carefully”.?The timing and extent of these reductions remains unclear.?Move too soon and inflation remains above the 2% fed target.??Move too late and risk putting the economy into recession.?Whatever the timing, we see lower rates as the main catalyst in the recovery of the mortgage & real estate markets.??
--Inventory Levels.?The main challenge right now in the local real estate market is the massive shortage of homes for sale.?As rates come down, buyers and sellers will re-emerge into the market, which is step #1 towards normalized inventory levels in the local market.?
--Arm Rates. You’ve likely heard that the “Yield Curve is inverted.”?This simply means that short-term interest rates are HIGER than long term rates.???Translated into mortgage terms:?ARM rates are HIGHER than fixed rates (above 7% at most banks).?Right now the 30 year fixed is around 6.75%, and in a typical market we’d expect to see ARM Rates in the low to mid 5% range.?The Fed essentially controls short-term interest rates… So as the fed reduces short-term rates, we should see ARM rates come down substantially.
--New lenders in our arsenal.?Cash available for loans continues to be a challenge at most banks.?Lenders with ample cash on hand can lend more readily and at lower interest rates.??As a result, we’ve added 5 new lenders in 2023, and continue to search daily for the lenders that are leading the industry.??
--Commercial Real Estate Loans.?For commercial property owners that opened loans in 2019 or before, those loans are currently maturing.???Morgan Stanley has estimated that over $1.5 trillion in commercial real estate loans are set to mature before the end of 2025, which means that those loans will need to be replaced.?Since mid-2023, we’ve seen increasing activity in our commercial lending business, and we expect this to continue as these loans mature.
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The market we’re in right now is incredibly volatile. So it’s CRITICAL to work with a lender that can counter that with the proper strategies and a wide range of options.?Our goal is to be the experts in our industry, and we do that by being informed, aggressively priced, and by offering solutions and options that you simply won’t find elsewhere.??
