Thehousing marketis at a turning point, and if youre thinking of buying or selling a home, that may leave you wondering:is it still a good time to buy a home? Should I make a move this year?To help answer those questions, lets turn to the experts for projections on what the second half of the year holds for residential real estate.
Where Mortgage Rates Will Go Depends on Inflation
While one of the big questions on all buyers minds is where will mortgage rates go in the months ahead, no one has a crystal ball to know exactly whatll happen in the future. Whathousing marketexperts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.
This year, rates have climbedover 2%due to the Federal Reserves response torising inflation. If inflation continues to rise, its likely that mortgage rates will respond. Greg McBride, Chief Financial Analyst atBankrate,explainsit well:
Until inflation peaks, mortgage rates wont either.Without improvement on the inflation front, we dont know where the interest rate ceiling will be.
Whether youre buying yourfirst homeor selling your current house tomake a move, todays mortgage rate is an important factor to consider. When rates rise, they impact affordability and your purchasing power.Thats why its crucial to work with a team of professionals, so you have expert advice to help you make an informed decision about your best move.
The Supply of Homes for Sale Projected To Continue Increasing
This year, particularly this spring, thenumber of homes for salehas grown. Thats partly due to more homeowners listing their houses, but also because higher mortgage rates have helped ease the intensity of buyer demand. Moderating buyer demand slows down the pace of home sales, which in turn helpsinventory rise.
Experts say that growth will continue. Recently,realtor.comupdated their2022 inventory forecast. In the latest release, they increased their projections for inventory gains dramatically, going from a 0.3% increase at the beginning of the year to a 15.0% jump by the end of 2022 (see graph below):
More homes to choose from is great news if youre craving more options for your home search just know that there isnt a sudden surplus of inventory on the horizon. Housing supply is still low, so youll need to partner with an agent to stay on top of whats available in your market and move fast when you find the one.Its not going to be easy to find a home, but it certainly wont be as difficult as it has been over the past two years.
Home Price Forecasts Call for Ongoing Appreciation
Due to the imbalance between the number of homes for sale and the number of buyers looking to make a purchase, the pandemic led to record-breaking increases in home prices. According toCoreLogic, homes appreciated by 15% in 2021, and theyve continued to rise this year.
Even though housing supply is increasing today, there are still more buyers than there are homes for sale, and thats maintaining the upward pressure onhome prices. Thats why experts are not calling for prices to decline, rather theyre forecasting theyll continue to climb, just at a more moderate pace this year. On average, homes are projected to appreciate by about 8.5% in 2022 (see graph below):
Selma Hepp, Deputy Chief Economist atCoreLogic,explainswhy 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 toslower home price growth but unlikely declines in home prices.
For current homeowners looking to sell, know your homes value isnt projected to fall, but waiting to make your purchase does mean your next home could cost more as home prices continue to appreciate. Thats why, if youre thinking about buying your first home or youre ready to make a move, it may make sense to do so now before prices climb higher. But rest assured, onceyou buy a home, that price appreciation will help grow the value of yourinvestment.
Bottom Line
Whether youre a homebuyer or seller, you need to know whats happening in the housing market, so you can make the most informed decision possible. Connect with a Seven Gables professional to discuss your goals and what lies ahead, so you can determine the best plan for your move.
