We are now past the middle of the year and most of us have felt a slight change in the real estate market. For a while now we have been in a market that was greatly skewed favoring sellers with inventory levels hovering around just one month’s supply where a normal market falls somewhere closer to six months. This has some wondering if it may be a good time to purchase or sell a home. Here are some interesting points made by experts in the market.
The Mortgage Rate Forecast
Many buyers are feeling the pinch as mortgage rates have been climbing this year by over 2%. While nobody has a crystal ball to know exactly what is to come for where they are headed, we can look at some logic as to why they are rising 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.” Rates do affect buying power so it is important to heed expert advice from professionals about your specific move.
Housing Supply Forecast
Good news has finally arrived for buyers now. Housing supply has been increasing this year due to more homeowners listing for sale but also because rising interest rates have softened buyer demand which in turn means more inventory. Realtor.com has recently changed their forecast for inventory projections for 2022 from 0.3% to 15% by year’s end. While there won’t be a quick increase of available homes, the steady growth in numbers should make buying a home easier than it has been in the past few years.
Housing Price Forecast
A few factors are at play with the future of home prices. Inflation has triggered interest rates to climb, but while that is calling for less buying power, there is still a strong amount of buyer demand out there. The same inflation factor drives renters who are experiencing rent increases to want to buy in order to have more control over monthly expenses with a fixed-rate mortgage. When you add all of this together experts predict that home prices will not see a decline, rather we will see more of a “foot off the gas” scenario. 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.”
In the end we are seeing more of a market correction rather than any sort of resemblance of a crash. The changes in the market are pushing conditions towards more of a balanced market that favors both sellers and buyers.