Despite variables that generally push down house prices, such as rising mortgage rates and an increase in housing availability, the price of homes has continued to rise. The statistics still demonstrate how robust and pricey the industry is.
According to the National Association of Realtors, the median home sales price has increased every month this year, reaching a record high of $413,800 in June before dipping slightly to $403,800 in July (NAR). According to some real estate experts, the minor decline is seasonal since the home market tends to cool down in the autumn. Even still, the price of existing homes sold in July was over 11% higher than it was a year earlier. Mortgage applications are at their lowest level in 22 years, according to the Mortgage Bankers Association, indicating that rising housing prices have had a negative impact on house searchers (MBA).
The overall state of the economy and consumer confidence have contributed to the current shift in the housing market. The economy is now in a precarious position. On the one hand, there are indications of a deteriorating economy as the GDP has fallen for two consecutive quarters, which some experts believe to be a symptom of a recession. On the other hand, consumer spending and the job market are still doing well.
Although a recession hasn’t been included into the MBA’s baseline projection, they believe there is a 50% possibility that the United States would experience a moderate recession during the next 12 months.
Forecasts for the housing market until September 2022
As the economy navigates this moment of uncertainty, several industry experts in the housing industry caution purchasers against attempting to time the market.
“The individual buyer’s motivation and circumstance will determine whether they choose to purchase now or wait. According to Krista Forsberg, a real estate agent at Keller Williams Realty in Edina, Minnesota, waiting “may not be a practical choice.” There isn’t expected to be any change in pricing or borrowing rates, even if a buyer can delay purchasing until later in the year or 2023.
The economy is being tugged in many different ways by factors like as inflation, increasing gas costs, the conflict in the Ukraine, and Covid-19, to mention a few, according to housing specialists. Despite being the main driver of the U.S. economy for the last several years, housing is beginning to show its age. For example, increasing loan rates are making it more difficult for purchasers to get cheap property.
According to the National Association of Realtors, the quantity of existing-home sales decreased by 5.9% from June to July, making it the sixth month in a row that sales have decreased (NAR). Although it fell somewhat to $403,800, the median sales price is still about 11% more than it was a year ago.
Will housing costs keep rising?
Housing affordability is being eroded by high property prices, high mortgage rates, and inflation. According to a Zillow research, the average monthly mortgage payment is now 76% more expensive than it was in June 2019. Additionally, income is not keeping up with the increased expenditures. Even while earnings increased 5.2% in July compared to the same month the previous year, inflation rose by 8.5%, leaving wages behind.
MBA analysts see no immediate decline in house values. In comparison to 2021, they predict that prices would rise by 9.9% per year in 2022 and by 3.1% in 2023.
Housing Supply Forecasts for 2022
Some analysts predict that while home prices may rise, alternatives will also increase.
According to a Realtor.com research, the number of available houses for sale increased in July at the quickest pace since 2017. This is a roughly 31% increase over the previous year.
According to the research, “the housing market is continuing to move toward greater equilibrium.” As sellers adapt to the new normal, price reductions are also rising as inventory levels grow, giving homebuyers who are still actively shopping for a new home additional alternatives.
Should I Purchase a House Now or Wait?
In any market, purchasing a home is a very personal choice. Homes are often the biggest single investment that a person will make in their lifetime, therefore it’s important to have a strong financial foundation before making a purchase.
To determine your monthly housing expenses depending on your down payment and interest rate, use a mortgage calculator.
It’s not a good idea to try to timing the market or forecast what will happen the next year when purchasing a house. Instead, it’s best to make purchases based on your requirements and budget. It’s possible that a house you like in a neighbourhood you like that also meets your budget is the one for you. However, if you give up too much in order to purchase a property, you can have buyer’s remorse and wind up with a costly albatross that you have to sell.
Buying Advice for a Hot Housing Market
Make a commitment to yourself to keep to the budget you establish at the outset. Buyers still have to contend with high prices and mortgage rates in the high 5% range, despite a minor increase in the quantity of properties for sale.
The mismatch between buyers and sellers, according to Rita Tayenaka, owner of Orange County, California-based Coast to Canyon brokerage, is now the largest issue. “Sellers want last year’s pricing, while buyers want to undercut each other.”
Although there is now a little more breathing space for buyers, they should also bear in mind that the market is still one in which sellers now have the upper hand.
Advice for Selling in a Hot Real Estate Market
Finding a listing agent who is knowledgeable about the region and comes highly rated is the first step towards a successful sale. A professional realtor will work closely with you to establish a fair asking price for your house while addressing inquiries and bids from potential purchasers.
Tayenaka warns sellers who continue to ask for 2021 pricing by pointing up the unusually high number of properties that have just fallen out of escrow. Everyone believes that their home is unique, she explains.
It’s in your best advantage to display your house in the best possible light even if the market may still be in your favour. Even though not everyone has money set up for improvements and repairs, a little labour may go a long way. Cleaning, organising, and decluttering are the initial steps.
Stacks of invoices and receipts should be put away, toys should be put away, and your kitchen should be clean. A fantastic technique to make your house seem airy and light is with bright lighting.
Even if your house is old, a spotless inside allows prospective purchasers to picture the possibilities of the new house.