“You have a lot of homeowners that are kicking the can down the road,” Nurani said. “They’re missing out on equity gains because they think they’re super confident about the fact that we’re going to see lower rates here, really, really soon. Because that’s what they hear on the media, and that’s what they hear from political candidates and people in office.”
Nurani said the factor that those customers don’t understand is the dual mandate of the Federal Reserve. While a softening job market led to a September cut and could lead to more cuts this year, a spike in inflation could bring all of those cuts to a sudden halt.
“The Fed has a dual mandate,” he said. “They have to make sure that our labor market stays intact. They also have to make sure that they curb inflation. And you’re already seeing inflation kick back up again, north of 3%. That tells you that the Fed is not going to sit here and make huge cuts to interest rates.”
Giving reassurance
While home prices have cooled in some markets, others, like California, continue to see housing shortages, which means prices will continue to rise. This also means that a homebuyer’s built-in equity will continue to increase.
“Properties are sitting a little bit longer, but you still have an inventory shortage, especially in California, but I mean all around the nation,” Nurani said. “So one of the things I try to explain to people is, so long as there’s a housing shortage, you’re going to see prices of homes increase. Because it’s just supply and demand economics. And if the demand continually outweighs the supply, the price goes up.”