Local residents who follow St. Cloud’s real estate fortunes can opt to track realtor.com’s observations for one view of what’s coming down the pike. Although the site is licensed to use the NAR’s realtor^® trademark, it’s published by a different entity. Nonetheless, its reportage is often relied upon by the national media as a top “go-to” information source.

So last Thursday, it was a Man Bites Dog-caliber news flash when realtor.com released an email admitting that their published predictions for this year’s residential real estate activity were already way off base. The email’s Subject read, “No one saw this real estate curveball coming.”

Intrigued St. Cloud recipients who opened the email were greeted with the intriguing

 headline, “A Real Estate Curveball Just Changed the Game.” Well, sure—it’s fair to say that there have been plenty of changes in the St. Cloud real estate picture, but few that alert local readers couldn’t have anticipated. That made it impossible to ignore: what was the completely unanticipated “curveball” that no one saw coming?

The answer was in the opening paragraph: “surging mortgage rates.” Readers would have been justified if that had them scratching their heads. For them, it might seem that a better question would be, “who didn’t expect surging mortgage rates?” For sure, one group is the economists at realtor.com.

Looking back, they had to acknowledge that their team had predicted that home loan interest rates would top out at 3.6% by the end of 2022—and since we already know that (as they admit) rates “hit a high of 5.3% last month,” it was clearly a badly missed call. To make matters more embarrassing, that threw off just about everything else they had forecast.

Local residents who have good memories will recall that a sudden surge in residential prices last December had been widely ascribed to buyers’ “rush to beat rising interest rates” (USA Today’s observation)—or the Wall Street Journal’s January prediction that “steadily rising interest rates” were “inevitable” beginning in mid-March. A 2022 top rate of 3.6% would have been within the realm of the possible, but banking on it does seem overly optimistic. And baseball fans would probably challenge the “curveball” metaphor—even minor league batters would likely have hit that one out of the park.

All in all, you can’t blame St. Cloud real estate watchers if they decide to take realtor.com’s new revised projections with a high degree of caution. Among the revisions are A) slower sales growth (yet still the “2^nd highest tally since 2007”); B) a greater number of homes for sale than originally projected; and C) home price growth that is “hotter for longer than originally anticipated”—resulting in a projection of 6.6%, significantly higher than the original.

We’ll have to wait to see how the St. Cloud real estate picture continues to develop—but if you are considering becoming part of that picture, now’s the time to give me a call!

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