Post-2008, nothing will strike fear into the hearts of buyers and sellers like the word "recession". But again, historical context is everything. Take a look at the chart below for some serious perspective. In 4 out of the last 6 recessions, home prices have continued to appreciate. So, if a recession happens, it does not necessarily mean home prices will decline. This is one of the most important pieces of information that you need to be aware of in today's shifting market.

The other big takeaway if a recession happens: interest rates usually go up at the beginning of an economic decline, but in order to stimulate the economy, they will typically fall.

According to Fortune: "Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continue to fall after the fact as it takes some time to turn things around even when the recession is technically over."

So, while the days of mortgage rates below 3% may be over, we also can't say for sure they're only going to go up from here. Making sure you know this is crucial to understand what to anticipate from today's shifting market is key to protecting yourself from any probable downfalls.

What's Going To Happen This Year In Real Estate?

When we're constantly being bombarded with different opinions and information, it's easy to get lost in the noise. Time and time again, people will let this get the best of them. So, while signs of a market shift become clearer each day, it's important to remember that context is everything. Yes, we are seeing a slowdown. However, we are really just heading back toward the market pace we saw pre-pandemic, and those were still great years for real estate. 

Focus on the big picture, and that's this: the housing market is still very strong, and previous projections are already outperforming what industry experts forecasted earlier this year. For example, all major real estate institutions are forecasting many more units being sold in 2022 than forecasted previously. Instead of getting caught up in headlines that do more to terrify than clarify what's really happening in real estate, cut through the noise and focus on what carries the most weight: expert-backed data and insights.

What's Happening With Mortgage Rates?

Rising mortgage rates are no doubt one of the biggest factors impacting the housing market right now. But it's important to remind yourself that the low rates of the last few years were an anomaly.

As inflation rises and mortgage rates climb, many may see their purchasing power shrink and their dream of homeownership fade.

However, it's important to remember one big piece of economic wisdom: there is no better hedge against inflation than homeownership.

Historically, we have seen homeownership outperform inflation in most decades. So, if there's an asset to invest in, housing is one of the few tangible assets that tends to hold its value.

Should I Buy A Home Right Now?

This is probably one of the biggest questions on everyone's mind and it's never been more important for buyers to wonder if it's the right time to buy. For all the reasons we mentioned above, the short answer to this question is 'Yes'.

Trying to time the housing market for that deal of a lifetime is like trying to win the lottery. And while purchasing a home today may not be as easy as it was a couple of years ago, the latest data shows that inventory levels are rising, which means more moderate price appreciation and more options for buyers.

Bottom Line

The housing market is undergoing a shift because of higher mortgage rates, but the market is still strong. Taking a decision to buy a home right now might not be easy for some, but there is more opportunity for those who are looking to build a hedge against inflation and possible recession. If you are one of those homebuyers who were looking to buy a home over the last couple of years and may have put their home search on pause as it felt impossible to do it, now is the time to reset and restart.

source: KCM, CoreLogic, NAR, The Balance, Fortune

Disclaimer: The above information is from sources believed reliable but should not be relied upon without verification. The publisher assumes no responsibility for its accuracy. You are encouraged to get independent legal advice before commencing any transaction.