Green-Shoot Indicators?

Has the Real Estate Market slump turned the corner? No-one knows for sure, but there are some encouraging indicators for New York City:

1. There was a 25% increase in weekly mortgage applications.

2. Mortgage rates continue to move down, now to a 4-month low.

3. Across the board we are hearing of an increase in buyer interest, open house traffic, and offers. Whether that translates to signed contracts could take a bit of waiting.

4. Home builder sentiment improved for the first time in 1 year.

5. Pending closings were down 30+% at moments in the fall, but over the last few weeks, we have seen pending listings in most of our markets nearly flat year over year.

6. We have seen more offers in January than we had from Thanksgiving to December 31. Both periods are traditionally not the busiest.......and.....

7. The Fed's aggressive and delayed interest rate hikes have started to take effect: aside from layoffs across industries - especially anything related to real estate - Core PCE inflation, the Fed’s preferred measure, rose 4.4% from a year ago, its smallest annual increase since October 2021.

8. Consumer spending dropped 0.2%, pointing to economic slowdown as 2022 closed. Thats another thing the FED is attempting to achieve with higher interest rates.

9. Personal income increased 0.2% for the month, as expected.

10. Intel has a chip SURPLUS.....a very different story compared to the supply-chain-shortage of 2021-22.

11. Goldman Sachs expects New York City real estate pricing to remain relatively flat and not drop as is more likely the case in some areas that saw massive price escalations in the past 3 years.

Now let's hope that the Fed has not gone too far, too fast as many suspect...... hopefully no recession or a very mild recession is in the cards? One thing seems certain: high inflation is turning out to be transitory, and some signs of DEflation are emerging too. The Fed's focus on rear-looking data is troubling.....and knowing how slow they were to act when inflation was rising gives a clear indicator that they may be as slow to act when they see their historically fast and large interest rate hikes are delivering too many negative consequences. Elevating supply of everything - including housing - is the surest path to downward pricing pressure. Their rate hikes are causing the exact opposite to happen.....