In Fannie Mae's January Forecast, they further outlined why they expect mortgage rates to dip and the economy to narrowly miss a downturn. 

The reasons for this revision include signalling from the Federal Reserve that rate cuts were on the table for 2024, slowing inflation and an upward trend in the growth of real personal income. 

“Inflation’s decline and the resultant Fed pivot to signaling future rate cuts lead us to believe that home sales and mortgage originations likely bottomed out in the second half of 2023..." Doug Duncan, senior vice president and chief economist at Fannie Mae, said, "And that a gradual improvement is now underway.”

Even as rates fall, the housing market is still being held hostage by the so-called lock-in effect, which is limiting the number of homes being listed for sale. With nine in 10 homeowners having a mortgage rate under 6%, many are finding little incentive to move and take on a new loan with a higher interest rate, and they are therefore feeling “locked in” to their current low rates. Consequently, home sales plunged to a 29-year-low in 2023 as supply dried up. 

Low resale inventory has been a boon to home builders, who are seeing an uptick in demand from buyers. Historically, newly built homes represent about one-tenth of housing inventory, but last year, that share rose to one-third. 

If mortgage rates fall below 6% by the end of 2024, that would prompt more homeowners to refinance, “thaw” the existing-home sales market and ease the lock-in effect, Fannie Mae said. If rates fall even lower, to the 5% range, that would further stimulate home sales, it noted.

But “a full recovery” to pre-pandemic levels “is expected to take years,” Fannie Mae stressed, “as housing affordability remains stretched extremely thin by historical standards relative to household incomes.” 

One thing we at World Properties Group always strive for is finding the best deals and solutions for our clients, and we have found gems for you!

Fixed rates in the 4's! Prices starting in the high 200's! 30 to 60 days closing! Several locations near Disney World and many of Florida's scenic beaches! 

If you're looking to add to your investment portfolio, if you want to save money monthly by spending it on a property you own, or if you're struggling to find good rates and deals because of the current market, we can find the solution for you!

​According to a recent article put out by Florida Realtors, NAR chief economist Lawrence Yun says, "Home sales are projected to rise significantly in each of the next two years as the market returns to normal sales activity."

According to Yun, “The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices... Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.” The Fed is likely to cut rates four times this year, which will keep the 30-year fixed-mortgage rates bouncing between 6-7%.

NAR also released its economic outlook as of January 2024, projecting a 13% increase in existing-home sales in 2024 to 4.62 million and a 15.8% increase in 2025 to 5.35 million. The annual median home price is expected to rise 1.4% to $395,100 in 2024, and then increase 2.6% to $405,200 in 2025.

​With supply still limited relative to demand, based on info gathered by Realtors®, we can see that 16% of homes sold above list price. That percentage is equal to that of a year ago, though down from last month's 19%.

• Due to the pace of the market, the use of technology, and lack of housing inventory, 9% of buyers were found to have purchased a home based only on a virtual tour, showing, or open house without physically seeing the home. This is up from 6% from both one month ago and one year ago.

First-time buyers represented 29% of buyers, which is down from 31% in November 2023 and December 2022. Among all buyers, Realtors® finds:

• 16% purchased for non-primary residence use, which is down from 18% last month and flat from last year.
• 5% were purchased for vacation use—unchanged from one month ago and one year ago.
• 2% of sales were distressed, which is up slightly from one month and one year ago.
• 1% of sellers sold to an iBuyer, which is down slightly from one month and one year ago.

Realtors® also finds that contracts typically closed in 30 days--the same as last month and one year ago--though some faced delays or termination:

• 6% of contracts had delayed settlement due to appraisal issues, which is down slightly from 7% last month and flat from one year ago.
• 16% of contracts had delayed settlements in the past three months—the same as last month and down slightly from 17% a year ago.
• 5% of contracts were terminated in the last three months—about the same as one month ago and flat from one year ago.

Realtors® also stated that contract activity will remain competitive:

• 29% of buyers had all-cash sales—up from 27% last month and up slightly from 28% in last year.
• 24% of buyers waived the inspection contingency—up from 18% one month ago and flat from one year ago.
• 15% of buyers waived the appraisal contingency—down from 19% one month and 18% one year ago.
• Buyers continue to look outside of city centers for the majority of their activity at 85%.

​Information provided by 
National Association of Realtors®​

It’s official: the first half of 2023 saw a sharp drop-off in commercial real estate (CRE) mortgage loan origination as compared to a year ago.
​
That’s the message from the data presented in the last two Mortgage Bankers Association (MBA) quarterly surveys. The surveys cover mortgage origination across all major CRE property types, in addition to examining investor trends in the space.

The United States economy is once again proving how it likes to change our expectations. Gross domestic product, the primary measure of economic output, grew at a 4.9% annualized rate from July through September, the Commerce Department reported. The faster-than-expected pace outperformed forecasts.

Since the Federal Reserve began aggressively raising interest rates in early 2021, nearly everyone has predicted that a recession lurks just around the next corner. Instead, third-quarter GDP posted its most robust performance since the rebound period in late 2021.

“Today’s GDP report shows the nation’s economy is again defying the odds by growing at a rate is much higher than expected,” said Selma Happ, chief economist at real estate data firm CoreLogic. “Federal interest rate policy is slowing inflation while also keeping unemployment numbers low and consumer spending strong.”

Indeed, slowing inflation has helped boost consumer purchasing power, and the job market has responded with strong showings in recent months. In September, U.S. unemployment was just 3.8%, and employers added a robust 336,000 jobs, the Labor Department reported. Year-over-year wage growth was 4.2%, a rate that outpaced inflation.

The combination of a healthy job market and cooling inflation gave consumers the confidence to spend freely on goods and services. “There’s been an enormous increase in wealth since COVID,” Yelena Shulyatyeva, senior economist for the bank BNP Paribas, told the New York Times. “People still take not just one vacation, not just two, but three and four.”
Things weren’t supposed to work out this way. In fact, the last deep downturn – the global financial crisis of 15 years ago — was followed by the Great Recession and a decade of tepid job growth and lackluster economic expansion.

The pandemic has played out very differently. The massive government stimulus during the early days of COVID-19 was designed to fend off another protracted economic calamity. With billions of people worldwide confined to their homes, the U.S. government pumped trillions into the economy. The snapback effect has been more dramatic than anyone expected.

Inflation soared, hiring surged and COVID was contained. Life returned to something like normal. But the whipsaw of an economic shutdown and a rapid reopening continue to reverberate through the economy.

In the post-pandemic world, economic reality continues to confound. “Initially, we were anticipating that a lot of that consumer strength was driven by special factors early in the summer,” Matthew Luzzetti, chief U.S. economist at Deutsche Bank, told The Wall Street Journal. “But the latest data show that there was more persistence.”

The good times are bound to end soon, many analysts predict. “Take a good look at the estimate for third quarter GDP because it could be the highest that we see for a while,” said Mark Hamrick, chief economic analyst at Bankrate.com. “With Q3 in the rearview mirror, and subject to future revisions, the focus turns to what’s in front of us. Expectations are muted for the intermediate term amid no shortage of sources of uncertainty. There’s no guarantee that recent substantial momentum can be sustained.”

Looking ahead, Federal Reserve officials are weighing whether to raise interest rates again. Many economists say growth slow through the fourth quarter as borrowing costs increase. Mortgage rates are flirting with 8%, slowing the housing market, and commercial and consumer borrowers are dealing with a higher rate environment.

“Growth this strong does not force a rate hike next week, but it means the Fed will indicate it is still contemplating higher rates,” Chris Low, chief economist at FHN Financial, said in a note, according to Bloomberg. “The Fed cannot declare tightening over with growth this strong and inflation still above target.”

Reflecting the new spate of uncertainty, 10-year Treasury yields briefly topped 5% in late October. The 10-year Treasury had been below 1% during the darkest days of the pandemic. Treasury rates are a barometer of investor sentiment and a benchmark for mortgages, and the sharp rise in rates has brought distress to commercial real estate.

Uncertainty looms in other corners, too. Wars in Ukraine and the Middle East have introduced wild cards. The chaos in the U.S. House of Representatives raises the odds of a partial government shutdown. Auto manufacturers and their workers are mired in an ongoing standoff.
For investors, the moment serves as a reminder that investing is full of risks. The ever-changing economic picture illustrates the reality of investing at the moment. Investors faced a period of intense uncertainty early in the pandemic. That was followed by a couple years of outsized returns.
As markets return to something like normalcy, the new climate underscores the wisdom of our focus on high yield investment opportunities with best-in-class operators across a variety of asset classes. The Real Asset Investor raises capital from accredited investors to acquire assets for cash flow, equity growth, tax benefits and diversification, giving investors options outside of conventional financial markets.

​Information provided by 
Bureau of Economic Analysis (U.S. Department of Commerce) & The Real Asset Investor​®