Now that the end of 2022 is within sight, you may be
wondering what’s going to happen in the housing market next year and what that
may mean if you’re thinking about buying a home. Here’s a look at the latest
expert insights on both mortgage rates and home prices so you can make your
best move possible.
Mortgage Rates Will Continue To Respond to Inflation
There’s no doubt mortgage rates have skyrocketed this year
as the market responded to high inflation. The increases we’ve seen were fast
and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at
the end of last month. In fact, it’s the first time they’ve risen this high in
over 20 years (see graph below):
In their latest quarterly report, Freddie Mac explains just
how fast the climb in rates has been:
“Just one year ago, rates were under 3%. This means that
while mortgage rates are not as high as they were in the 80’s, they have more
than doubled in the past year. Mortgage rates have never doubled in a year
before.”
Because we’re in unprecedented territory, it’s hard to say
with certainty where mortgage rates will go from here. Projecting the future of
mortgage rates is far from an exact science, but experts do agree that, moving
forward, mortgage rates will continue to respond to inflation. If inflation
stays high, mortgage rates likely will too.
Home Price Changes Will Vary by Market
As buyer demand has eased this year in response to those
higher mortgage rates, home prices have moderated in many markets too. In terms
of the forecast for next year, expert projections are mixed. The general
consensus is home price appreciation will vary by local market, with more
significant changes happening in overheated areas. As Mark Fleming, Chief
Economist at First American, says:
“House price appreciation has slowed in all 50 markets we
track, but the deceleration is generally more dramatic in areas that
experienced the strongest peak appreciation rates.”
Basically, some areas may still see slight price growth
while others may see slight price declines. It all depends on other factors at
play in that local market, like the balance between supply and demand. This may
be why experts are divided on their latest national forecasts (see graph
below):
Bottom Line
If you want to know what’s happening with home prices or
mortgage rates, let’s connect so you have the latest on what experts are saying
and what that means for our area.
Source: Real Estate with Keeping Current Matters
