Anyone owning a home today is thrilled to see the incredible appreciation over the last 5 years. Just this year we have seen a 19% increase in home values! That can put a smile on your face but as we all know too well, what goes up must come down. That old saying holds true in every sector of our economy, including housing. Not too long ago, interest rates were at all-time lows at 2.8% for a 30-year fixed rate. We are now approaching 6% for that same 30-year mortgage. Imagine you are trying to buy your first home and not only rates have gone up, but home prices have skyrocketed. There is a breaking point where young buyers will back away from submitting an offer and wait for homes to become more affordable for their budget.

It is true that the millennial population (ages 30-40) are forming their families and want to leave their apartments just as you did a few years back. It is also true that the population count of this generation is about the same as baby boomers which is approximately 75 million strong. So where does that leave us today? Well, I can report that homes are still selling in a relatively short period of time which is about 7-14 days. We are still seeing multiple offers and over-asking offers, but they are beginning to diminish. Remember, we are Realtors see the market in real time. You, the public, get the news about 2 months after a market change is occurring. That is because most media focus on closed sales with occur about 30-60 days after an offer is submitted for acceptance by the seller. In real time, we are noticing a change. Buyers are pulling back a bit as to what they offer as well as waiting longer to submit their offers. The market is still excellent, but I believe the change is here but hard to quantify.

I began my career when interest rates began to rise, like now, and kept rising until they hit 20% in 1981! Who would have ever thought that could happen, but most of you remember when it did happen. There is no telling where the rates will rise to at this time, but you can bet the increasing interest rates will continue for some months to come to curb inflation. The goal is to slow down the rising prices and try to avoid a recession at the same time which is quite the balancing act.

So, where does that leave you, the homeowner? If you are thinking of selling and then buying, trying to time the sale doesn’t really make sense, because if your home drops in value, so will the one you want to purchase. But, if you are planning on selling and then moving to an apartment or senior community, selling at the highest price possible is an advantage as this money is critical so that you don’t outlive your funds. I believe the peak prices are here, now. I also am quite sure that when news comes out that prices are beginning to level out or even fall, many boomers will put their home on the market at the same time, remembering 2008 and the consequences of waiting too long to sell. This increase in inventory will further exacerbate the downward pricing of single-family homes and condominiums. Senior apartments will then begin to fill up to the point where many communities that offer availability now will begin to reach the point of no vacancies and then on to a waiting list. You want to move to a senior community when you have the choices of view and location and not wait until you no longer have the luxury of choosing the location and view you wanted. When communities begin to fill up, apartment prices will then rise, as availability will be chocked off.

I make it a point to always see the glass half-full. This article may come across as the glass spilling over completely, but I’ve been in this business for quite a while and have the ability to see change before most see the results. I also must add the caveat that my projections may be a bit off in timing, but I am quite sure that my assessment will be accurate at some point this year.

Remember also that the money you receive from the sale of your home is mostly tax exempt from capitol gains (single persons are exempt from $250,000 in gain and up to $500,000 in gain for a couple). That makes the sale of your home even more important because what you will net will be tax free for most of you.

Sir Isaac Newton’s law of gravity applies not just to nature, but to our economy. The definition of his law is a phrase that means things that rise must eventually return to earth due to gravity. Know that these laws remain constant and are guideposts for all of us to follow if we are to be successful in our lives.