Bursting your bubble?
What if I told you that inflation was at 5.6%, gas was averaging $4.11 per gallon, and house prices had risen dramatically? No big deal, right? We are working our way through it… but those statistics are from 2008, immediately before the housing collapse. Our present stats are worse. Here is a quick comparison:
There are plenty of reasons to believe that we will not see a repeat of the Great Recession, but the Fed is signaling that there will be a correction in housing. The link and summary below are directly from the Federal Reserve Bank.
Managers should expect a decline in resale activity in the coming months, which will level-off and remain modest for 2-3 years. Resale transactions have been a shot in the arm as we exit Covid, but it couldn’t last forever. So how can you plan now to limit those losses with offsetting revenue sources?
Our team can provide a free revenue analysis if you are interested in ways to increase revenue during an economic downturn. We can suggest options ranging from first-party workflow automations to integrated partnerships.
What is the fed saying?
Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators — the price-to-rent ratio, in particular, and the price-to-income ratio — which show signs that 2021 house prices appear increasingly out of step with fundamentals. While historically low interest rates are a factor, they do not fully explain housing market developments. Other drivers have played a role, including pandemic-related U.S. fiscal stimulus programs and COVID-19-related supply-chain disruptions and associated policy responses. The resulting fundamental-driven higher house prices may have fueled a fear-of-missing-out wave of exuberance involving new investors and more aggressive speculation among existing investors.