RE/MAX founder reveals timing for house price drop
Homeownership hopefuls might finally catch a break over the next year, said RE/MAX chairman and co-founder Dave Liniger.
Liniger predicted a potential real estate market boom within the next year, fueled by two key factors: rising housing supply and potentially lower interest rates.
“I estimate that there are between nine and 11 million people who want to be homeowners that can’t afford to be homeowners right now because of the cost of the interest rate, or because they already got a house with a very low interest rate that wouldn’t transfer to the new purchase,” Dave Liniger said in an interview with Fox Business.
Liniger pointed out that the market is seeing an increase in housing inventory, which makes for a quick sale.
“There’s lots of buyers. So as the inventory increases, you’ll start seeing price pressure, and you’ll probably see some price relaxation throughout the country,” he said.
The real estate tycoon’s comments come amid new data from Redfin showing that the cost of buying a new home has hit another all-time high.
The median US home sale price reached $397,954 in June, a nearly 5% increase from the previous year. This marks the highest level on record and the biggest annual increase since March.
At this price, with the median interest rate for a 30-year mortgage at 6.86%, the monthly mortgage payments now stand at $2,749, just $88 shy of April’s record high.
Liniger expanded on his prediction that market pressures could ease after years of underbuilding homes and the Federal Reserve’s aggressive rate campaign.
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“Our homebuyers have been used to a 15-year period of the lowest interest rates in the country’s history, and so they’re reluctant to move out of that into something that’s 7 or 8%,” said the RE/MAX chairman.
Liniger noted that the average interest rate since 1973 is 7.78%, but the recent 15-year period of exceptionally low rates has disrupted the market.
“If you start seeing the interest rate dipping down towards 6%, 5.9%, I think it would open the floodgates,” Liniger added.
While Liniger anticipates a rebound, economists generally expect mortgage rates to stay elevated through most of 2024.
They believe rate cuts from the Federal Reserve are unlikely to happen until later this year, and even then, they might be minimal. Investors predict one or two rate reductions at most.
Despite the cautious economic outlook, Liniger remained optimistic.
“It’ll take a year,” he said. “But over the next year, you’re going to see a tremendous rebound in the real estate industry.”
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