Bernice Ross
Is there a recession looming on the horizon? Will prices and mortgage costs improve? Whether you’re a brand-new agent or a 40-year veteran, market intelligence expert Rick Sharga has the answers you need to cope with what’s ahead as we approach the spring selling market.
Sharga, the CEO of market intelligence company CJ Patrick, is a long-time real estate veteran with deep experience in the data and foreclosure side of the business. I recently sat down with Sharga for his take on the trends and data you need to know to better prepared confront the challenges ahead this spring.
First: Is there is a recession ahead?
“The Federal Reserve has raised the Fed Funds Rate 12 times now, to try and get inflation under control,” Sharga said. “Eleven of those 12 times, we’ve seen them overcorrect and cause a recession. This feels a whole lot like an overcorrection.”
On the other hand, Sharga said that the delinquency rate on mortgages has not increased. Couple this with strong consumer spending, job creation, low unemployment rates, and productivity still being strong.
Sharga pointed to a red flag that has a high probability of impacting the housing market as we move into spring selling season.
For the first time ever, Consumer Credit Card Debt exceeded $1 trillion in the third quarter of 2023 and increased in Q4 of 2023 to a record-breaking $1.3 trillion – something many economists worry could be a sign of households tapping credit lines to make ends meet.
Second: Inventory remains tight as prices increase between 4 percent to 6 percent per year nationally.
“People will be competing for fewer properties, and this will keep prices from falling. The supply and demand imbalance will continue to exist,” Sharga said.
So, what about the “Silver Tsunami”?
Boomers will be a source of future inventory, but Sharga doesn’t expect a wave.
Sharga foresees a gradual increase in Baby Boomers listing their homes for sale. Also, increased new home permits coupled with increased new housing starts, suggest that the new home market could help to bridge the inventory gap as Boomers sell their current homes and move into newer properties.
Overall, Sharga thinks inventory will not loosen up until rates drop to around 5.5 percent to draw homeowners with low mortgage rates off the sidelines.
He sees a “boring year” ahead for the housing market for the rest of 2024.
“Sales activity for both existing and new homes will increase year over year, probably not to 2022 levels, prices will go up a little bit, foreclosures will be at a minimum, and it will be a couple of years while the market resets,” Sharga predicted. “Patience is probably the buzzword for 2024.”
Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.
