New Year, New Perspective

With a sense of gloom pervading the industry for what feels like years, let’s work to break through the negativity and focus on the good news for the industry. I’m not disputing the validity of market concerns on home price appreciation, higher interest rates, or inventory constraints, but there is still plenty of good news for the market as we begin the new year. Let’s concentrate on these four:

1. Rates are Still Low

Rates may be high compared to recent levels during and prior to the pandemic, but they are still historically low, according to a historical mortgage rate chart from TIME. It’s so easy to get caught up in the here and now that we forget to bring current rates into perspective.

2. People are Building Wealth

Homeownership continues to help Americans build wealth for their futures. The National Association of Realtors (NAR) reported that single-family homeowners typically accumulated $225,000 in housing wealth over 10 years. The NAR also reports that average monthly rents increased by more than 14% year-over-year in December 2021 and the Federal Reserve Bank of Dallas forecasts that year-over-year rental price growth will reach 8.4% by May 2023.

With rent prices soaring, homeownership is not only a great wealth-building tool for the future, but it could be the more affordable option for the here and now. While it seems like a big commitment upfront, buying a home could potentially offer a lower monthly cost, while allowing buyers to start building equity that will pay off in the long run.

3. Homeownership Brings Social Benefits

Another study from the NAR found that homeowners see a lot of social benefits, too. For one, homeowners tend to be more involved in their communities. The study showed that they are more likely to vote in elections and volunteer at local charities, because of the stake they have in the community.

Homeowners also form social bonds with neighbors and feel a sense of attachment to where they live. They also have more incentive to deter crime and can even see positive health benefits, much like those that come with positivity.

4. New Builds can Catch Up

Supply chain issues are finally subsiding. Sea-Intelligence, a supply chain research and analysis firm, reports that 50% of supply chain congestion has been resolved and that a “full reversal to normality” could come in March 2023.

Lumber prices also are coming down. Quartz reported that lumber prices are near pre-pandemic levels and expected to continue falling into 2023. With many of the challenges that faced new construction now easing, builders can better address the inventory issue the market has been facing for quite some time. Better inventory can help bring prices down and remedy many of the challenges we’ve been seeing this year.

The bottom line is no one knows what 2023 will hold. Whatever events we may encounter, your attitude will play a large role in your success this year — or any year, for that matter.

Lucille Ball is quoted as saying, “One of the things I learned the hard way was that it doesn’t pay to get discouraged. Keeping busy and making optimism a way of life can restore your faith in yourself.” Start 2023 off with your head held high and try to keep the good in perspective, it may pay off better than you think.