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50 Prior to 2022, analysts across most markets predicted a contin- ued run of good fortune. Perhaps it was denial or simply the hope that the Federal Reserve would achieve the soft landing that (so far) eludes us. No matter the root cause, analysts saw their hopes shatter as, for example, consensus estimates of the S&P 500 striking 5,225 by year's end fell short by more than 40%. A confluence of factors spun together to create the perfect economic storm we've experi- enced: rampant inflation, geopolitical uncertainty, nearly a decade-long bull run, overinflated valuations, and (perhaps most devasting) a series of rate hikes marking the end of the pandemic era's environment of cheap debt and soaring investments. WHAT HAPPENED IN HOUSING? Anyone paying attention could have pre- dicted the impact of rate hikes, especially on the housing market. Rock-bottom rates led to a 50- year low in fixed-rate mortgage average at just be- low 2.7%, while supply chain chokepoints led to a housing supply shortage, and economic stimulus led to soaring home prices as investors speculated wildly which drove values upward. And, as with most other markets, the fall happened nearly as fast as the meteoric rise. Logistics caught up, and new starts began again. Economic uncertainty and the highest fixed-rate mortgage average since 2000 (6.95%) caused supply to catch up and surpass demand. e few who could sell at the top considered themselves lucky as home sales slumped, the me- dian days on the market for home sales doubled, and prices for homes that did sell dropped by nearly 30% in less than six months. e housing slump is easily the economy's most significant casualty in the Fed's fight against inflation—even if the full scope isn't yet apparent. Volatile equities can generally be counted upon to revert to a mean over time. Fixed-income investing is enjoying a new resurgence, despite inflationary pressures on even the best Treasury rates. Home valuation inflation means many late-2021 and early-2022 buyers may be seeing underwater mortgages in their future. Dormant new builds are sitting on unfortunate developer balance sheets, with little reprieve as financially insecure Americans hunker down, unwilling to brave near-double-digit mortgage rates. EARLY WARNING SIGNS But, despite the blaring alarms towards the end of 2021, careful observers spotted red flags as we ended the previous decade. Post-2008's "Great Financial Crisis," housing prices hit a low in mid-2012 before rebounding and climbing with limited headwinds for the rest of the 2010s. A decade-plus of quantitative easing began, ending before the pandemic reared its head, and 2019's interest rates began nosing around 4%— the highest they had been in more than a decade, and considered high for the time. Many thought the pandemic's emergence would end an eight- year housing bull run. e prediction proved un- true as home prices enjoyed a V-shaped recovery alongside equities. at reversal interrupted what would have otherwise been a predictable dip in HOUSING MARKET 2023: PREDICTIONS AND STRATEGIES With 2021 benefiting home sellers, the transition to a distinctly buyer-biased market is on the horizon. Feature By Louis Amaya

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