The housing market is at a turning point, and if you’re thinking of buying or selling a home, you may have questions.
Is it still a good time to buy a home?
Should I make a move this year?
How does the remainder of 2022 look for residential real estate?
Mortgage Rates Are Subject To Inflation
While buyers question where mortgage rates will go in the months ahead, there is no crystal ball to foretell what will happen. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.
In 2022, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. Greg McBride, Chief Financial Analyst at Bankrate, explains:
“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.”
The Supply of Homes for Sale Is Projected To Increase
This year, particularly during the spring, the number of homes for sale in the US increased. That’s partly due to more homeowners listing their houses, but also because higher
mortgage rates helped reduce buyer demand. As buyer demand moderates, inventories rise.
Experts say that growth will continue. Recently, realtor.com increased their 2022 projections for inventory gains dramatically from a 0.3% increase at the beginning of the year
to a 15.0% jump by the end of the year.
While an increase in home selection is great news, there is no sudden surplus of inventory on the horizon. Housing supply is still low. Finding a home will still be a challenge, but not as difficult as it has been over the past two years.
Home Price Appreciation Will Continue
Due to the imbalance between the number of homes for sale and the number of buyers, the pandemic led to record-breaking increases in home prices. According to CoreLogic, homes appreciated by 15% in 2021, and they’ve continued to rise this year.
Selma Hepp, Deputy Chief Economist at CoreLogic, explains why the housing market will see deceleration, but not depreciation, in prices:
“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
If you’re thinking about buying your first home or you’re ready to make a move, it may make sense to do so now before prices climb higher.
Contact me and let’s work together to determine the best plan for your move.