We had the opportunity to chat with Bill Raveis, CEO of William Raveis Real Estate, about the state of the market, mortgage rates, what he’s seen in past years, and where the market is heading.
The market is cyclical
“I’ve been in real estate for 50+ years and there have been many cycles within those 50 years. You have 8 years up and about 2 years that have an adjustment and then another 8 years up, so we are going through a normal cycle and adjustment period. If you take a look at the pandemic in 2020 where our values rose up tremendously, there were some adjustments that were made at that stage so this is a cycle and this is an adjustment to that cycle.”
Supply and demand
“We still have low supply and we have a lot of demand, therefore the prices will continue to go up, regardless of interest rates. What happens when the rate goes down? You *might * have more supply but your demand will increase, people will re-enter the market that were waiting for rates to drop. You’re going to have a continuing cycle of price appreciation for the next several years. The circumstances – one is low inventory, giving you price appreciation, and the other is low rates, also giving you price appreciation.”
“There are still 4.5 million houses being sold, people are still moving, people are upgrading their homes, downsizing, they’re having kids, becoming empty nesters, divorces and marriages happen, new jobs – a variety of circumstances, but people are still buying and selling. The best thing to do is to buy now because in the future it’s going to be more expensive. We are in a normal cycle, it’s not doom and gloom. You’re not going to lose money buying a house, even if interest rates go to 8%. They’re at 7.5% now and my guess is they’re going to be touching 8% by the end of this year.
It’s still a good time to buy because your values will be going up faster than any kind of interest rate that you have. We’re going through an adjustment period. “Marry the home, date the rate” as they say. You can always change the rates. If you find something you want now, buy it regardless of rates, because you’re always going to win in terms of long-term housing investments, historically you’re not going to lose. You’ll never lose in the marketplace in 8 years of ownership. I do think the 7-8% interest rates will be here until the end of this year, maybe a little bit of 2024. Then in 2025, we’re off to the races again!”