Macroeconomic prediction 2022
When the housing marking will be cool?
Fed recently announced that they will reduce quantitative easing by half from March 2022, and they will increase interest rate thrice in 2022, twice in 2023 and 2024 each. Currently, the rate is ~0% as a after effect of COVID market crash in March 2020 and since then we have seen a NASDAQ growth of 2.19x. Housing price increased astronomically as well as the inflation touched 6.5%. All these indicators are pushing Fed to take a reasonable step- increase interst rate. What could be the rate increase?
What would be the rate in 2022?
Historically when Fed increase or reduce rate on a non-crisis moment, they do it at 0.25–0.30% increment. I assume the rate might look like this in next three years:
22 Q3 0.60%
22 Q4 0.90%
23 Q2 1.2%
23 Q4 1.50%
24 Q2 1.8%
24 Q4 2.1%
When housing market is going to cool down?
It’s a hard game! Even top 50 macro economists might come up with 40 different responses and only one of v then will be right. Housing market might start to cool off when interest rate reaches ~1% which might happen in early 2023. It might completely stabilizes when interest rate reaches >2% which might happen in late 2024 to early 2025.
When should then I buy a house
Ideal time should be 2025 Winter or 2026 Spring. But that’s not how life works. Semi optimal solution would be mid 2023. Rates would be ~1.2% and people with 750+ credit score might get mortgage loan at 3.5–3.8%. However, that wouldn’t stop Wall Street to stop investing in housing which means market will still be warm. Retail purchaser might slow down purchasing investment home and that’s why the condo/townhome properties might go down.