We're heading into spring 2023 in the DC real estate market, and everyone wants to know what to expect. Here's our take:
Rates, Inflation & Recession, Oh My!
2023 got off to a rocky start with uninspiring reports from the foreboding comments from Fed Chair Powell on March 7th:
“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Financial market reaction was swift and brutal. The major indexes dropped more than 1 percent and the two year Treasury note shot up to its highest market since 2007. Nasdaq lost 1.3 percent. Ouch.
The CME FedWatch put a 61+% probability on the Fed raising rates by 50 basis points at the next FOMC meeting on March 22nd. But that didn't happen. Why?
Bank failures. SVB and Signature, closely followed by Credit Suisse and First Republic scares. Powell seemed shaken.
Institutional outlooks and analyst predictions quickly changed, forecasting stubborn inflation, fewer and smaller rate hikes, and greater possibility of a recession, with its severity ranging from mild to moderate. Stagflation was a concern, so was consumer confidence in America's financial institutions.
The Housing Market
The March 21st Housing Report showed stronger than expected U.S. existing home sales, the largest in over 2.5 years, ending a 12 month-long decline.
- Existing home sales jump 14.5% in February
- Median house price falls 0.2% to $363,000 from year ago
- Supply increases 15.3% year-on-year to 980,000 units
The industry began to think everything was going to be ok after all.
Then the Fed somewhat apologetically raised rates another quarter point. Oy.
So where are we now? Review our full market report at:
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