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PREDICTIONS ACCORDING TO MARKETWATCH:
First: MORTGAGE RATES WILL RISE.
As of today, mortgage rates have increased from 3.2% to 4.4%…which, is NOW the same level we saw back in 2019. It’s no surprise that rates will likely go a LOT HIGHER as the Federal Reserve continually raises rates for the foreseeable future…meaning, either demand will BEGIN to subside…or, buyers will rush to lock in a “low” rate while they still can.
Second: EXPECT LESS COMPETITION.
“The combination of rising interest rates and rising house prices will push some would-be buyers out of the market, which may result in reduced competition after the summer buying season is over.”
THIRD: HOME PRICE APPRECIATION WILL SLOW.
For example…CoreLogic expects housing prices to see a 6% increase throughout the next 12 months…Realtor .com predicts another 2.9% rise…and Zillow says that “supply chain bottlenecks and years of under-building will keep inventory relatively low for the foreseeable future.”…with prices peaking at 21.6% in May, before slowing back down.
FOURTH: EXPENSIVE HOMES WILL BECOME MORE AFFORDABLE, BUT “CHEAPER” HOMES WILL BECOME MORE COMPETITIVE.
MarketWatch quoted that “There are more listings at the upper end, homes priced above $500,000, compared to a year ago, which should lead to less hurried decisions by some buyers.” It’s also predicted that, as mortgage rates rise…buyers will be forced to shop within a lower pew point, driving up the competition in less expensive neighborhoods.
AND FINALLY, FIFTH: FORECLOSURES WILL RISE.
However, as a real estate professional myself…I have to say…I completely disagree with one. Even though foreclosure rates HAVE been increasing….data from RealtyTrac found that “most of the activity is primarily on vacant and abandoned properties, or loans that were in foreclosure prior to the pandemic.” Across the US, only 1 in 6675 housing units falls in this category…and, if we look back historically…we’re still WELL under historic averages, meaning – fewer people are underwater on their homes, far fewer people are going into foreclosure, and more people than ever have equity from which they can cash in on.
I’ve mentioned this before, but – in the BIG PICTURE – even though higher interest rates DIRECTLY impact home affordability – other factors, like local market conditions, demand, inventory, inflation, tax deductions, population changes, new construction, and the overall health of the economy play just as big of a factor…so, rising rates ALONE won’t do enough to cause prices to decline…BUT, they can.
The issue we have, today, isn’t so much of speculation, no money down, and free loans to anyone who wants a house…but, instead…a shortage of inventory, strong demand, and THAT is pushing prices higher.
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