Market Conditions May Help Offset Uncertainty

Market Conditions May Help Offset Uncertainty

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Naturally, when world events cause economic uncertainty, markets react. However, the housing market has some things going for it that may help offset any upcoming volatility. For example, there have been a lower than normal number of homes for sale in many markets for a while now. Combined with a high level of home buyer demand, that lack of inventory meant more competition, increasing prices, and fewer choices for buyers. But it may also mean the market is well positioned to absorb any changes to the current balance of supply and demand. Additionally, historically low mortgage rates are expected to help support housing activity. That’s the opinion of Fannie Mae’s Economic and Strategic Research Group. “While uncertainty and heightened financial volatility may soften demand for ‘big ticket’ items including home purchases, the ESR Group expects historically low mortgage rates to provide some offsetting relief,” their most recent release says. “The lower interest rate environment is likely to continue to support housing and fuel a surge in refinance activity, even as macroeconomic growth slows.” In other words, though the current environment is uncertain, housing market conditions may help offset the effects of that uncertainty. (source)

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