It has been an extremely interesting week in real estate. After listening to an extremely detailed and technical analysis from Barry Habib, the leading economist when it come to real estate predictions, his statistics confirmed what I have been seeing and feeling. Combine that with what has happened just in the past few days, and it has set the stage for a perfect storm coming by the third quarter of 2023. As you know, inflation is caused by too many dollars chasing too few goods. With China and Taiwan opening ports, goods are finally making it onto the shelves. That is part of the supply. The FED is doing an excellent job by taking money out of the system by raising the rates on short term loans and credit cards. By May 10th you will see a large drop in inflation. That is when the year over year increase is calculated. We, in real estate, knew this would happen. 
We also knew that our housing shortage is critically low, less than 20% of what we need on an annual level. We need 4 million listings a year and currently have under 800,000 homes available nationally. Builders are starting to build but we have experienced little to no building since 2008. The largest group in history are turning 33 (median average age of new household formation). They have gone to sleep over the past 4 months as interest rates have risen. We all thought that these rates would fall as they are artificially high right now being driven by fear of increasing inflation. We all felt that it would take at least this year for them to come down.
Something interesting happened this week. Two banks failed. These are isolated instances not due to poor lending standards or foreclosures but by poor investments by the banks and financial ignorance of the tech industries. . I knew immediately that all the large banks would slash interest rates on mortgages as a show of confidence. They did and overnight rates fell by about 1% to under 6%! I thought that the FED knowing that we would be seeing a large drop in inflation in the May 10th report immediately reported that IF they raise the rate, it might be the last increase and it may be much smaller than originally indicated. This is again, a show of optimism and confidence based on historical statistics. Without getting into the weeds, here is the bottom line. By the third quarter interest rates and inflation will drop BUT inventory will remain low. What do you think the results are going to be? It is going to be like Walmart had a sale on black Friday.
We are going to get back to 10+ offers on houses and prices are going to climb faster than we had originally thought for this year. I know my sellers are worried about where they will go if they sell. That is another discussion that I will have if anyone calls me BUT, Buyers, you need to get into the market NOW. DO NOT WAIT UNTIL JUNE OR JULY!! In hockey you do not go to where the PUCK IS, you go to where it will be. Get in position to score. Get ahead of the wave or you will drown.