The Federal Reserve decided to leave interest rates alone at its final meeting of the year but signaled that it’s officially finished raising interest rates in its historic inflation fight — and could also cut interest rates three times next year. Fed Chair Jerome Powell still gave his boilerplate speech about the importance of fighting inflation at the end of his opening remarks of his post-meeting press conference. But the Fed’s language in its policy statement and projections, and Powell’s commentary taking reporters’ questions, marked a “dovish” turn in their track record of playing safe.
The Federal Open Market Committee’s (FOMC) decision to pause rate hikes for the third straight meeting adds to suspicions that its July rate hike — when officials lifted their benchmark borrowing rate to a 22-year high — might have been the last.
Policymakers have been lifting interest rates at a record pace since March 2022, taking their key federal funds rate from a rock-bottom level of near-zero to its current target range of 5.25-5.5 percent in just a 16-month span. Those have been the fastest pace of rate hikes since the 1980s, moves fueled by hopes to drain the economy of the hottest inflation in generations.
Real estate inventory of homes remains very tight and low as it has been for the last 3.5 years, keeping prices to rise steady in most areas. The average sales price in Atlantic County, NJ along with Cape May County, Cumberland County, Ocean County, Gloucester County, Camden County and even Salem County, NJ have all rose non stop in the last 3 years, averaging between 4% to 7% price increases a year. With limited supply of homes, this should continue. The shore 2nd home market has been slowing some, but still commanding great prices for sellers.
After two down years, mainly because of the low inventory that prevails, things could soon be looking up. That’s the outlook from NAR-National Association of Realtors- Chief Economist Lawrence Yun, who is expecting a big bounce back in home sales in 2024.
During the National Association of Realtors’ annual Real Estate Forecast Summit on Dec. 12, Yun reiterated the predictions he mentioned in November, saying he believes existing home sales will increase by at least 13% next year, reaching 4.71 million, while new home sales will see a 19% jump. Those increases will effectively rebalance the market after home sales declined 18% in 2022 and are expected to decline another 18% by the end of 2023.
But there’s an important wild card, Yun noted: mortgage interest rates. Yun expects rates to settle around 6.3% in 2024, which he said is low enough to unleash some pent-up demand. Hopefully we will see 5% rates with 15 year amortization payouts. So keep in mind if you are looking to buy and sell as rates start to drop more, more buyers will be creating more competition for limited houses, so prices will still remain stable and gradually increase as long as the demand persists, with limited supply.
I want to wish all the best to you and your family always of course!, 🙂 and especially for this upcoming holiday season. It has been very crazy times we have been living in since covid and the shut downs. Sad to see some friends lose their companies and business. Many of us have lost love ones or family members or good friends in the last 3 years.
Stay healthy, get your exercise, you owe it to yourself and your family!
God bless us all.