With so many variables, it’s really anyone’s guess. The Fed seems wedded to its plan to push interest rates higher. Higher interest rates have created balance sheet risk for banks that traditionally hold long-term Treasury bonds as Silicon Valley and Signature bank learned the hard way.Then there are the troubling tech layoffs and rising recession risks.
It’s enough to keep an investor up at night!
What impact will all of this have on the real estate market? That’s what real estate investors really want to know.
In the latest March 2023 article from MarketWatch, here is what some of the experts are saying…
“Home prices have been falling for months in a lot of markets in the Pacific time zone and in Austin, Texas. Price growth has been slowing in the rest of the country and we might see a year-over-year decline in prices nationwide this spring,” says Holden Lewis, home and mortgage expert at NerdWallet.
Adds Jacob Channel, senior economist at LendingTree: “Going into April, home prices could continue to decline somewhat, though they probably won’t drastically decrease, nor will they even fall everywhere. Keep in mind that real estate tends to be very local, so even if prices do fall nationwide, that doesn’t mean that prices in every neighborhood will do the same.”
Following on to that sentiment, Hannah Jones, economic research analyst at Realtor.com, says: “Home sales are likely to rebound seasonally, but the adjusted sales pace is expected to remain low as uncertainty and high costs limit transactions. I expect continued downward pressure on home prices.”
And according to recent data reported by Black Knight and the economists over at CNBC, real estate “price dynamics differ depending on location. Miami continues to see the largest price gains, along with more affordable markets in the Midwest, like Cincinnati, Columbus, Ohio, and Cleveland, according to Black Knight. Meanwhile, prices are still falling in some of the markets which saw the greatest price inflation over the last several years. Those include Austin, Texas, Las Vegas, Salt Lake City, Seattle and San Francisco.”
So, what does that mean for you as a real estate investor?
Here at NavCap, we see our clients find properties every day with lots of upside potential. Our advice is to carefully evaluate each project on its own merits and against the backdrop of the particular real estate market it’s in. These days it pays to be cautious but there are still deals to be had. We are seeing strong demand for our DSCR loan products including our long-term cash out refinance rental loans.