BUSINESS
56
B January | 2024
to meet demand. "e current 3.1
months' supply of existing homes is
well below the four to six months
of inventory that is considered a
balanced housing market," Yaros
adds. Strong demand caused a 10.3
percent increase in the median price
for existing homes in 2022 and a 0.6
percent increase in 2023. A correction
of 1.1 percent is expected in 2024.
For an explanation of the scarcity,
look no further than the run-up in
mortgage rates. e ultra-low interest
rates of existing mortgages amount
to a strong financial incentive for
existing homeowners to stay put.
"Many current homeowners had
refinanced their investments at 3
percent or 4 percent," notes says Bill
Conerly, Ph.D., principal of Conerly
Consulting in Lake Oswego, Ore.
"Replacing what they have with better
homes would require walking away
from those mortgages and take on
new ones at 7 percent. I think we'll
see this trend continue for throughout
2024, but I also think we'll see a lot of
strength in remodeling, and that will
be financed probably with home-
equity lending or second mortgages."
BUSINESS CONFIDENCE
High interest rates, an inflationary
environment and rising worker
wages are a trilogy of challenges
that typically dampen business
confidence. And there are other
threats to corporate well-being,
as well, such as increasing energy
costs and an appreciation in the U.S.
dollar that hampers export activity.
Despite all this, many companies don't
seem to be planning any dramatic
adjustments to their operations, in
marked contrast to their cautious
attitude of a year earlier. "While
our members have moderated their
expectations for the future, they are
still feeling slightly positive," says
Palisin. "One reason is that we seem
to have avoided the recession that
many were predicting." Moody's
" … retailers
should expect
shoppers to
continue to spend
more on services
rather than
merchandise
[in 2024]."
