Leading SA: Housing and stock market outlook for the upcoming year

Jack Hawthorne, CEO of Keller Williams Heritage breaks down the latest finance news

SAN ANTONIO – Whether it is the stock market or the housing market, 2022 has been a roller coaster of emotions and prices. There are a lot of questions revolving around interest rates, a possible recession, and what comes next.

Jack Hawthorne, CEO of Keller Williams Heritage joined Leading SA on Sunday to break it all down.

“So we don’t know yet whether or not inflation has peaked. What we know now is we have two solid data points where two months in a row where it started to go the right direction. Now, what we also saw is that the Fed said, yeah, it’s going in the right direction, but we still need more information to know if that’s going to be a permanent thing. We see a lot of things like labor moving where they want, but we still see housing, shelter costs, rent still going up pretty dramatically. So they’re going to keep evaluating. I’m not sure yet whether or not we’ve hit a peak, but I know that we’re going to keep trending down until something drastic happens,” Hawthorne said.

After Jerome Powell, chair of the Federal Reserve spoke about interest rates, the financial markets went down.

“The markets react poorly to uncertainty, and that’s really what happened. We had great news with a good CPI report. We went down, which was wonderful. Now we have a trend. Like we said, however, when the Fed came out and said, okay, we’re glad we have a trend. However, we don’t have enough data to know where we’re going to have to stop. And so just to be safe, we’re actually going to raise our target interest rate up to 5.1%. What that means is we’re moving up quite a bit from where they thought they were going to be before. And so now the market is saying, well, we got great news and you’re giving us bad news. We don’t know what to think about this. And when people don’t know what to think, they freak out and the market goes down,” Hawthorne said.

Right now economists and financial analysts are discussing the possibility of a recession.

“When you look at a recession, you’ve got two different things. You have a technical recession and then you have an actual recession being declared. By all accounts, we’re already in a recession, and so we just tell people to act accordingly. Now, whether or not the government actually says we are in a actual recession may or may not happen. And so people going forward should just price that in and say, look, we know that interest rates are still going to be going up and down as far as mortgage rates go. We know that the Fed is going to continue to increase interest rates. And so until we start seeing inflation come down dramatically on CPI, we should expect to keep moving in the same direction,” Hawthorne said.

These macroeconomic conditions do have an impact on the housing market.

“I put my money where my mouth is on this. I’m still actively buying as well. It really does make sense to buy a home if you’re in the market now. If you don’t need to buy a home, then this may or may not be the right time for you, depending on your financials and what you’re looking for. But when you do the math, you’re actually going to make far more money on buying a home because you’re still going to have appreciation over the next several years. While your mortgage payment may be a little bit less if you wait a couple of years to buy a home, you’re going to miss out on all of that equity you would have built by simply letting time do the work for you,” Hawthorne said.

Prices are going down because less people are buying.

“You’re just going to see less people buying because they have less buying power. You’re going to need more for down payment, you’re going to need more to cover your monthly expenses with your mortgage. And so we’re seeing less buying pressure. What that’s done to the market is we’ve seen prices go down, but we haven’t seen valuations go down,” Hawthorne said.

Hawthorne added there are specific trends in the local housing market.

“San Antonio within itself is a hot market. Now we do see the east side of San Antonio getting a lot of love as we turn more into a suburb of Austin. We’re seeing a lot of money in development go out that way. But realistically, the way that I recommend everyone approach this is that if you’re thinking about buying in San Antonio, you need to be talking to a local realtor because they’re actually in the market every single day,” Hawthorne said.

About the Author

Max Massey is the GMSA weekend anchor and a general assignments reporter. Max has been live at some of the biggest national stories out of Texas in recent years, including the Sutherland Springs shooting, Hurricane Harvey and the manhunt for the Austin bomber. Outside of work, Max follows politics and sports, especially Penn State, his alma mater.

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