To succeed as a buyer in today’s market, it’s important to understand which market trends will have the greatest impact on your home search. Danielle Hale, Chief Economist at realtor.com, says there are two factors every buyer should keep their eyes on:
“Going forward, the conditions buyers face are primarily dependent on two things: mortgage rates and housing supply.”
Here’s a look at each one.
Mortgage Rates Projected To Rise in 2022.
As a buyer, your interest rate directly impacts how much you’ll pay on your monthly mortgage when you purchase a home. Rates are beginning to rise, and experts forecast they’ll continue going up in 2022 (see graph below): As the graph shows, mortgage rates are expected to climb next year. But they’re still low when you compare to where they were just a few years ago. That gives today’s buyers some motivation to lock in a low mortgage rate before climbing higher.
More Homes Are Expected To Be Available This Season.
The other market condition buyers need to monitor is the number of homes available today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows the current supply of inventory sits at just 2.4 months. To put that into perspective, a 6-month supply is ideal for a balanced market with enough homes to meet buyer demand.
However, there may be good news for buyers waiting for more options. A recent realtor.com survey shows more sellers plan to list their homes this winter, meaning more choices will likely be available soon.
What Does That Mean for You?
Even if your options improve this season, it won’t significantly shift market conditions overnight. According to NAR, many more listings need to be available to move closer to a more neutral market:
“Given the average monthly demand . . . , 3.55 million homes should be on the market to meet a level of inventory equal to six months of demand, implying a shortage of homes for sale of 2.24 million.”
So remember, even with more homes expected to come to market this season, competition among buyers will remain fierce as there still won’t be enough homes for sale to meet the current demand. That means you’ll need to act quickly when ready to make an offer.
Bottom Line.
If you plan on buying a home this winter, more options are welcome news, but it doesn’t mean you should slow down. Let’s connect with KM Realty Group LLC, Chicago, today so you have an expert to help act quickly when the right home for you hits the market.