As we are now past the midpoint of the year Cervone Deegan + Associates knows that most of us have felt a slight change in the real estate market. For many years we have been in a market that was more in favor of sellers with inventory levels staying around one month’s supply whereas a more normal market falls somewhere closer to six. This has some questioning if it may be a good time to purchase or sell a home. Here are some valid points covered by experts in the market.
The Mortgage Rate Forecast
Some buyers are feeling the pinch as home loan rates have been climbing this year by over 2%. While nobody has a crystal ball to know exactly what lies in store for where they are headed, we can look at some logic as to why they are increasing now. Chief Financial Analyst of Bankrate states “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.” Mortgage rates do impact buying power so it is important to heed expert advice from professionals about your specific move.
Housing Supply Forecast
Some good news is now on the table for buyers. Housing supply has been rising this year due to more homeowners putting their homes up for sale but also because rising interest rates have softened buyer demand which results in more inventory. Realtor.com has since updated its forecast for inventory projections for 2022 from 0.3% to 15% by year’s end. While there won’t be a quick influx of available homes, the steady growth in numbers should make buying a home easier than it has been in the past couple of years.
Housing Price Forecast
A few factors are at play with the trend in home prices. Inflation has triggered interest rates to climb, but while that is making for less buying power, there is still significant buyer demand out in the marketplace. The same inflation factor drives renters who are experiencing increases to want to buy in order to have more control over their monthly expenses with a fixed-rate mortgage. When you add all of this up experts predict that home prices will not see a decline, rather we will see more of a “foot off the gas” scenario. The Deputy Chief Economist of CoreLogic states “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.”
Ultimately we are seeing more of a market correction rather than any sort of crash. The changes in the landscape are moving conditions toward more of a balanced market that favors both sellers and buyers.