By Mike Bodeen · 19 February 2024
Market Will Remain Sluggish Without Improvement
In a recent Snapshot, we wrote that 7% mortgage rates were the line in the sand where buyers move forward or hang back. At the time, rates were around 6.6% and buyers were grabbing their helmets and coming off the sidelines.
And then the unholy grail of economic news, the Consumer Price Index (CPI), came out this past Tuesday (13th) with the not so good news, that inflation is still higher than they (Feds) want, which then sent the unofficial message that cuts in the Fed rate this year won’t be as automatic as the markets would desire. Shelter costs (mortgage and rent) played a leading role in the CPI jump.
“Arizona is famous for its boom and bust real estate cycles, but at this moment it is very much stuck in neutral.” Michael Orr; The Cromford Report
This news sent the U.S. 10 Year Note Bond Yield rates to over 4.275% so mortgage rates, which follow the 10 Year Bond direction, soared back over 7% and the stock market (Dow) lost over 500 points. (See Chart Below)
So, here we are back over 7% and we expect that until that changes our market will remain stagnant. If this occurs, buyers, who are able to buy, will benefit with a higher inventory of available homes to choose from and regaining leverage with sellers.
Summing up our current market, Michael Orr of the Cromford Report put it this way:
“Altogether there is not much to get excited about if you are longing for positive movement. On the other hand, there is also not much to get excited about if you are hoping for the market to crash. I have nothing to satisfy either of these positions. Arizona is famous for its boom and bust real estate cycles, but at this moment it is very much stuck in neutral.”
What does this mean for sellers? They may need to continue to work with buyers requesting concessions for rate buy-downs or more flexibility on price. (read: advantage buyers)
Finally, all this can change in a heartbeat. It’s a fickle and gyrating market that few, if any have a clue what’s going on.
And isn’t that comforting;-(
Market data referenced in this article comes from The Cromford Report.