MORRO BAY, Calif., April 11, 2022 (GLOBE NEWSWIRE) -- Brian Icenhower, real estate industry expert consultant, author, thought leader, and CEO of Icenhower Coaching and Consulting, uses historical market data to make his predictions. Contrary to the popular buzz circulating across mainstream media right now, Icenhower cautions the public. "Watching and waiting for the housing market to 'improve' is unwise."
"We aren't in a housing bubble," states Icenhower.
"Prices are not coming down. This is not the time to wait it out." Is the worst yet to come for homebuyers? "Buckle up - we are going to continue to see home price appreciation at historical levels over the next several years - regardless of what the average mortgage rates do. Follow the data and buy now or lose out."
"If mortgage rates rise, so will home prices," projects Icenhower. "Over the past 50 years, rising mortgage rates have repeatedly fueled home prices and caused them to increase. So although increasing rates might help to curb inflation, they actually drive appreciation in real estate values higher."
"Rising mortgage rates decrease housing inventory since many homeowners chose to stay in their current homes financed at a low rate rather than buy a new home at a higher rate." Icenhower goes on to explain, "In turn, this decreases the number of homes for sale on the market, furthering the already problematic shortage of housing supply. This brings us to the fundamental economic principle that when supply is reduced, prices will rise."
No, the government does not directly control the mortgage rate.
"Just because the U.S. Federal Reserve raised interest rates, it doesn't mean mortgage rates will also increase," Icenhower continues. "The Federal Reserve board lost control of mortgage rates 20 years ago. The feds control the Federal Funds Rate, and mortgage rates are controlled by open market considerations closely tied to the sale of 10-Year Treasury Bonds."
The Great Recession in 2008 is an example of what happens when the government intervenes. "Most economists point to open market economic intervention tactics like quantitative easing, economic stimulus packages, and government securities purchases, as the reason for the departure from the norm that we saw in 2008." Will the government do this again? It's possible.
"The U.S. Federal Government is the real wild card here. It's not a far-fetched idea for the government to increase quantitative easing efforts again in order to keep mortgage rates low in an attempt to make housing more affordable for millions of Americans that are increasingly being priced out of the market."
Increasing mortgage rates mean that buying and selling may be out of reach for most families.
Inflation means appreciation when it comes to houses. When home prices go up, people will still need to buy houses, and the value of those houses continues to rise. Shelter will always be in demand. Yes, there is a lull right now. "Sellers are considering whether or not they want to sell and forfeit their lower mortgage rate. But, as history has shown us, this lull is temporary," says Icenhower. Prices will not stop increasing, at a historic rate, anytime soon.
Buyers and sellers that choose to wait may miss out completely.
"The best time to buy is now," warns Icenhower. "Urgency has never been higher. Rates are increasing and home prices are increasing." Waiting may be the difference in whether or not an individual will be able to buy or sell their home.
Will mortgage rates go down? Don't count on it. "Waiting has never been a worse idea, whether you are a buyer or a seller," urges Icenhower. "Houses will continue to appreciate in value at historic levels, regardless of whether the mortgage rate goes up or down."
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Brian Icenhower, real estate industry expert consultant, author, thought leader, and CEO of Icenhower Coaching and Consulting
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