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- Jason Oppenheim said the US real estate market will have “a rough couple of years” in an interview with Yahoo.
- Inventory levels and high interest rates are the two primary concerns among homebuyers, he added.
- Oppenheim said buying is still a good long-term investment if buyers can limit their short-term costs.
Jason Oppenheim, the star of the hit Netflix series “Selling Sunset,” offered a somber outlook for the US real estate market in an interview with Yahoo Finance over the weekend.
Oppenheim, whose eponymous brokerage is based in Los Angeles, said the real estate market likely bottomed out at the end of 2022, but it could still take a couple of years to fully recover. Two factors Oppenheim pointed out that could impede the recovery include homeowners who are reluctant to put their homes on the market because they have a low interest rate mortgage, as well as an overall low supply of homes for new buyers to purchase.
“I’m generally optimistic, but I don’t want to pretend like the real estate market is going to be on the rise,” Oppenheim said.
The US real estate market witnessed a meteoric rise in home prices between early 2020 and last summer as demand surged during the pandemic. Between March 2020 and May 2022, the US national median home price increased by more than 42% up to more than $431,000, according to data from Redfin. However, median home prices have steadily declined by about 10% since May 2022 and currently sit near $388,000.
Some western markets have seen their home prices drop more significantly. For example, Redfin data shows the median home price in pandemic boomtowns like Denver has declined by more than 18% to $529,000 since its peak in April 2022. In Boise, Idaho, the median sales price has declined by about 17% since May 2022 to $485,000, according to Redfin stats.
That rise in home prices was partly due to historically low inventory and low interest rates, combined with a flood of stimulus money. While interest rates have steadily increased since the beginning of the pandemic, inventory remains a challenge in many markets across the country.
In turn, the combination of higher interest rates and lower demand has brought some “homeostasis” to the market because home prices are not rising nearly as fast as they once were, Oppenheim said. However, the market is still in for a “rough couple of years” until inventory levels recover.
“In terms of prices, I think there’s going to be some stability, which is probably healthy for the market,” Oppenheim said. “So, I think we’re going to see a relatively healthy market over the next couple of years.”
Interest rates remain a concern among homebuyers of all income brackets, Oppenheim added, because they make it more expensive to buy a home and can also depress inventory levels.
One way that potential homebuyers can reduce their monthly payments is to take out a mortgage with a five- or 10-year term instead of the traditional 30-year fixed mortgage, Oppenheim said. This approach could give buyers more flexibility to refinance their mortgage and get a lower interest rate, or to limit the transaction costs a buyer pays at closing, he added.
“It’s always better to buy versus rent, especially if you can hold the asset through the ups and downs and take advantage of the appreciation over a decade or two,” Oppenheim said about whether buying a home is still a good long-term investment.