The housing market is at a turning point, and if you’re 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, let’s turn to the experts for projections on what the 2nd half of the year holds for residential real estate.
Where Mortgage Rates Will Go Depends on Inflation
One of the big questions on all buyers’ minds is where mortgage rates will go in the months ahead. No one has a crystal ball to know exactly what’ll happen in the future. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.
This year, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. If inflation continues to rise, mortgage rates will likely respond. Greg McBride, Chief Financial Analyst at Bankrate, explains it well:
“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.”
Whether you’re buying your first home or selling your current house to make a move. Today’s mortgage rate is an important factor to consider. When rates rise, they impact affordability and your purchasing power. That’s why working with a team of professionals is crucial. So you have expert advice to help you make the right decision about your best move.
The Supply of Homes for Sale is Projected To Continue Increasing
This year, particularly this spring, the number of homes for sale has grown. That’s 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 helps inventory rise.
Experts say that growth will continue. Recently, realtor.com updated its 2022 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 you’re craving more options for your home search – know that there isn’t a sudden surplus of inventory on the horizon. The housing supply is still low, so you’ll need to partner with an agent to stay on top of what’s available in your market. And, move fast when you find the one.
It’s not easy to find a home, but it won’t 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 in the Chicagoland area and surrounding suburbs and the number of buyers looking to purchase, 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.
Even though the housing supply is increasing today. There are still more buyers than homes for sale, which maintains the upward pressure on home prices. That’s why experts are not calling for prices to decline. Rather, they’re forecasting they’ll 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 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.”
For current homeowners looking to sell know your home’s value isn’t projected to fall. But waiting to make your purchase does mean your next home could cost more as home prices continue to appreciate. That’s why if you’re considering buying your first home or are ready to move. It may make sense to do so now before prices climb higher. But rest assured, once you buy a home, that price appreciation will help grow the value of your investment.
Bottom Line: What Expert’s Saying
Whether you’re a home buyer or seller. You need to know what’s happening in the housing market to make the most informed decision possible. Connect with real estate experts in your area to discuss your goals and what lies ahead so that you can determine the best plan for your move.
