Is Real Estate Dead?

• For many millennials, the ‘American Dream’ is dead. They are having a harder and harder time getting their foot in the real estate game. Due to stubborn inflation, the federal central bank has taken action by increasing interest rates perputually since first quarter 2022, and there’s no end in sight. Homeowner’s are having a hard time finding an incentive to move – list their home for sale – because they don’t want to lose their +/-2% interest rate, leaving inventory rather low overall. I spoke to a millennial back in the summer of 2022 about becoming a home buyer for the first time. She stated, she’s excited for interest rates to go up because she wanted to buy something. After looking at her perplexingly, she explained her theory that if interest rates go up, buyer competition and home prices will drop. Well, none of that turned out to be true. Real Estate is seeing a conundrum. A rat trap has taken place leaving no room for mercy. People who want to buy are getting slapped by high interest rates, low inventory, still high home prices, and difficulty loan qualifying. On top of all this, gas prices are over five dollars a gallon in certain places, layoffs have taken place and good paying jobs are shrinking. For many, the solution is to continue waiting or leave state for places like Texas and Florida. As an appraiser, our business and other’s alike, have taken a major hit by these interest rates. I’ve spoke to residential and commercial real estate appraisers who’ve all said the same thing, this is the slowest they’ve every been during their 30-40 year tenure. Residential appraiser’s have left their independently owned firms for county assessor jobs. Real estate agents have taken out small equity loans to simply live. Everyone has their own predication and opinion. The realty is, within Year 2024, or 2025 worst case scenario, the feds will start slashing mortgage rates. This will help counterbalance the effects, pumping more real estate activity. In the mean time, the death of real estate is more like a comma. A long enduced comma being carefully monitored by the federal reserve doctors. September 3, 2023