Market Trends: 3 Things to Expect in an Unsettled Housing Market
Fluctuating interest rates, home prices, and continued inventory woes in high demand areas are generating confusion for home buyers and sellers.
Here’s what to expect:
1. Mortgage rates will continue to rise
As inflation increases, the average rate of a 30-year mortgage has exceeded levels not seen since the 2008 financial crisis. According to Bankrate.com, the current average is just over 6.4% vs. 3% last year.
2. Housing inventory is increasing
Property time-on-market has increased and more properties have become available, especially in higher price points. Marketwatch has estimated an excess of 20,000 homes for sale for buyers earning $ 200,000 a year.
3. Housing prices may cool, but not fall
Housing demand remains high even with rising interest rates. While sales will slow, prices are not expected to fall significantly — although activity varies by market and price point.
Zillow expects prices to continue to increase by 9.7% through May 2023, Capital Economics sees a home price growth decline of 5% by mid 2023, with a “gradual recovery” to 3% annual price growth by the end of 2024.