2022 Housing Market Forecast

Mortgage rates will average 3.3%

Mortgage rates play a significant role in your home search. As rates go up, your monthly mortgage payment increases if you’re buying a home, directly affecting how much you can afford. And even the smallest increase can have a large impact on your?monthly Payment.

With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of waiting and hoping rates will fall, today’s rates should motivate you to purchase now before rates increase more,

Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run.?

Beware of Clickbait Headlines.

Anyone with a megaphone – from the mainstream media to a lone blogger – has realized that bad news sells. Unfortunately, we’ll continue to see a rash of troublesome headlines over the next few months.

There are already alarmist headlines starting to appear. Here are two recent topics you may have seen in the news.

1.????Forecloses Are Spiking:

There are a number of headlines circulating that call out the rising foreclosures in today’s real estate market. Those stories focus on an overly narrow view on that topic: the current volume of foreclosures compared to 2020. They emphasize that we’re seeing far more foreclosures this year compared to last.

That seems rather daunting. However, though it’s true foreclosures have been up over the 2020 numbers, it’s important to realize that there were virtually no foreclosures last year because of the forbearance plan. If we compare this September to September of 2019 (the last normal year), foreclosures?were down 70%. gto?ATTOM.

Homeowners who have been impacted by the pandemic are not generally the ones being burdened right now. That’s because the?forbearance program?has worked. And the government is still making sure homeowners have every opportunity to stay in their homes.?

2.????Rising Mortgage Rates Will Slow the Housing Market

Another topic that’s generating frequent headlines is the rise in?mortgage rates. Some people are expressing concern that rising rates will negatively impact the housing market by causing home sales to dramatically decline. The resulting headlines are raising unneeded alarm bells. To counteract those headlines, we need to take a look at what history tells us. Looking at data over the last 20 years, there’s no evidence that an increase in rates dramatically forces sales to come to a halt. Nor does home?price appreciation?come to a screeching stop.

It’s true that sales fell rather dramatically from 2007 through 2010, but mortgage rates were also falling at the time. ?Outside of the years following the crash, prices continued to appreciate, just at a slower rate.

Home Equity Will Continue to Rise, Though at a Slower Rate of Appreciation.

Economist are predicting home appreciation will rise average of 5.1% next year.??Inventory is still a big challenge. ?When supply is low, demand is high. that naturally make prices rise.?We’ll still have an inventory challenge next year but likely softening because builders are coming back, building more homes. We also anticipate more sellers will feel less pressure coming out of the pandemic and maybe interested in selling their home, so going back into the market if they’ve held off.

Bottom Line

2022 should be another strong year for the housing market.?Inventory is still low and isn’t expected to be fixed overnight.?With rising rates and higher housing prices, seller’s will want to make the most of their opportunity to sell now, while the market is still strong, and buy another home before interest rates rise higher.??There’s a lot of misinformation out there. If you want the best advice on what’s happening in the current housing market, let’s connect.

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