Mortgage Rates and Inflation
The big questions on all buyers’ minds are ‘where will mortgage rates go in the months ahead?’ No one knows the future. What housing market “experts” guess for sure is that the record-low mortgage rates during the pandemic were not normal.
This year, rates have climbed over 2% due to the Federal Reserve building back. And with inflation rising, mortgage rates will respond.
Greg McBride, Chief Financial Analyst at Bankrate, working to explain:
“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.”
Whether you are buying your first home or selling your current home, today’s mortgage rates are factors to consider. When rates rise, they impact affordability and ability to purchase. Which is why it is crucial to work with a team of professionals, so you have expert advice to help you make informed decisions.
The Supply of Homes for Sale Projected To Continue Increasing?
This spring, I noticed a growing number of homes for sale, which is partly due to more homeowners listing their houses and partly because higher mortgage rates inadvertently ease buyer demand, which slows down the pace of home sales, which in turn helps inventory rise, hence the Federal Reserve building back.
Recently, realtor.com updated their 2022 inventory forecast. In their latest forecast release, they adjusted their projections for inventory: 0.3% increase at the beginning of the year to a 15.0% jump by the end of 2022.
More homes to choose from will be a good thing. Search your options with a home search. Housing supply is still low, so you will want to communicate with your agent so you stay on top of what will become available next.
Home Price Forecasts Call for Ongoing Appreciation
Due to the imbalance between the number of homes for sale and the number of buyers looking to make a purchase, the pandemic led to record-breaking increases in home prices. According to CoreLogic, homes appreciated by 15% in 2021, and they’ve continued to rise this year.
I see more buyers than there are homes for sale, which is maintaining upward pressure on home prices. These ‘experts’ are not saying prices will decline, rather they’re forecasting a continuing climb. On average, homes may appreciate by about 8.5% in 2022.
Selma Hepp, Deputy Chief Economist at CoreLogic, tries explaining why the housing market will see deceleration, but not depreciation, in prices:
“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.”
For current homeowners looking to sell, know your home’s value is not projected to fall, but waiting to make your purchase does mean your next home could cost more as home prices continue to appreciate. That is why if you are thinking about buying your first home or you are ready to make your next move, it may make sense to do so now before prices climb higher and price appreciation should help grow the value of your investment.
Stay Tuned for More Homebuying and Homeselling Help with Tim from Newington Connecticut
Steve Schappert The Connecticut Real Estate Broker
Call and Text Steve Schappert 203-994-3950
Email Broker@CTREB.com
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You are a concerned homebuyer or homeseller and you need to know what is happening in the housing market, so you can make the most informed decision possible.