Housing Market Update | March 2022 with Erik Braceland

How is the conflict between the Ukraine and Russia affecting the housing market here in the US?

Welcome back to another real estate market update!?I’m Erik Braceland with Braceland Homes here in sunny San Diego, California, where we guarantee the sale and/or purchase of your home.?Here on the Braceland Homes Blog we cover topics related to buying and selling residential real estate, and trends happening across the housing market, with new videos every Thursday.

We’ve talked a lot about home price appreciation in the past, and I’m sure you want to know where that's headed after our inflation talk last week.?And as we think about rising prices in general. If you haven't already gotten it from my clever image here, home prices are projected to continue rising...believe it, or not.

Let’s take a look at this graph from the Home Price Expectation Survey.?I think this gives you a real clear picture of where home prices are projected to go according to the leading experts in the field. Now the Home Price Expectation Survey is a survey of 100 economists.?These are data analysts, people who are projecting out home price appreciation. And in the fourth quarter of last year, this is the projection for cumulative house appreciation by 2026. So, what are we looking at? They divided out the group into optimists and pessimists. Optimists being the ones projecting the most appreciation over the next five years, and pessimists estimating on the lower side.?Take a look at that orange bar on the right. Those are the pessimists. The experts, that are considered pessimists, are saying that cumulative home price appreciation, by 2026, is going to be over 23 percent, on the low side. Pretty substantial even on the low side.?The you can see the optimistic experts are projecting over 62% cumulative home price appreciation over the next five years on the high side.?And finally, if we average the opinions of all these expert economists, we are looking at a gain of just over 43%.??

So then, what’s projected to happen? Home values are expected to increase in value over time, as they normally do, but at a pretty significant rate over the next five years.?Now This, is pretty important, to those of you thinking of making a move.?Locking in today’s cost is mission critical for those of you who have the opportunity to do so. Check out this video, titled Hedge Against Inflation With Real Estate:

You want to protect yourselves from rising interest rates, that we'll talk about in just a minute, and rising prices, that are all around us, by locking in, or fixing, your largest monthly payment with a mortgage.

Now Let’s talk a little bit about mortgage interest rates. A lot of you are probably wondering about Russia and Ukraine, and how that tragic situation is going to affect things. So, let's take a look at where we are today, and then I'll keep you posted as we move forward, with fresh updates on what’s happening with these mortgage rates.??

Right now we're seeing a bit of a reprieve with the rise in interest rates.??Freddie Mac saying, “Geopolitical tensions caused U.S. Treasury yields to recede this week as investors moved to the safety of bonds, leading to a drop in mortgage rates. While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months."?So as of last week, looks like things have indeed cooled a bit from the peak of 3.92% in mid Feb.?So, three take-aways here.?First, they reference the treasury yield, because historically, interest rates tend to follow the trajectory of the 10-year treasury yield, so it’s a good indicator of how things will shake out.?Second, there's market uncertainty because of the war.?And third, rates are only expected to stay low for a short time.?So, there is a window of opportunity here if you are planning to make a move.?And as always, I want o present those opportunities to you whenever they appear.

We have a visual?showing us the progression of mortgage rates going back to January of 2020.?You can clearly see where rates dropped to a low of almost three percent in January of last year during the pandemic - another period of crisis, and opportunity – and then slowly rising up to almost four percent last month.?And you see the roughly quarter point dip as the conflict with Russia and Ukraine really heated up.

Hear we have another quote from the National Association of Realtors saying something very similar to Freddie Mac, "Following the trend of the 10-year Treasury yield, mortgage rates will likely fall, remaining below 3.9% this week. However, expect mortgage rates to rise later this month as the Fed will raise interest rates."?Again, they touch on the ten-year treasury yield I spoke about earlier and how it’s a great indicator of where mortgage rates will go, and they also emphasis that rates won't remain low.?NAR also mentions the FED, which doesn't control mortgage rates, but does have influence over them.

The First American Financial Corporation echoes these previous sentiments with this, "The 10-year Treasury yield is down… likely in response to the worsening Russia-Ukraine conflict, and mortgage rates may follow suit."??

Let's take a look at that 10-year Treasury yield here.?You can see how it looks a lot like the right half of the graph we saw earlier showing mortgage rate changes, and why it might be such a good indicator of the that mortgage rate trajectory.?Just like the mortgage rate graph, it starts low in January of last year, and then climbs through the beginning of February, finally dropping off in mid-February.?But its already coming back up in March, so we may see that increase in mortgage rates resume any day.

I do want to put this in perspective for you, and this graphic does a great job of that.?Even with mortgage interest rates rising, where we are today is still lower than where mortgage rates have been at any time over the last 50 years!?Think about that.?It's just really amazing!?Look at the double-digit interest rates in the eighties!??

Yes, home prices are nuts, but as I've demonstrated in the past, home prices and mortgage rates tend to rise together.?If you have a move in your future, sooner really is better than later for so many reasons right now.?Great low mortgage rates that are rising, and high home prices that are only getting higher are two of the big ones.??

If you've enjoyed this content or found it helpful, please hit that like button.?It really does mean a lot, and keeps me motivated to produce more free content.?And please share this content with someone you think might benefit from it.?Thanks for joining me, and I'll see you right back here soon!