With so much recent change in the housing market, you probably have questions about what it all means for your homebuying plans this spring. Here are two things that are likely top of mind for you.
1. What’s Going on with Mortgage Rates?
Last year, mortgage rates more than doubled within the calendar year. That’s never happened before, and the rapid rise caused many buyers to put their plans on hold. Today, rates are still quite volatile. With experts projecting rates will stabilize this year, that could be great news for you if you’re ready to buy a home.
Any drop in interest rates helps boost your purchasing power by bringing your expected monthly mortgage payment down. But you shouldn’t expect rates to drop all the way down to the record lows we saw in 2021. Experts agree that isn’t a range buyers should expect. Greg McBride, Chief Financial Analyst at Bankrate, explains: “I think we could be surprised at how much mortgage rates pull back this year. But we’re not going back to 3 percent anytime soon, because inflation is not going back to 2 percent anytime soon.” It’s important to have a realistic vision for what you can expect this spring. Though we’re not going back to 3% mortgage rates, you may be surprised by the impact even a mild drop in rates has on your budget.
2. What’s Happening with Home Prices?
Headlines about home prices can be confusing. While home price appreciation has cooled, where home prices go from here will vary based on supply and demand in our local market. That may be why some experts say prices will decline slightly and others say they’ll continue to climb, just more moderately than they did in the frenzy of the pandemic. The important thing is, overall, experts say price appreciation will be relatively neutral or flat this year.
The Bottom Line: Everyone is on a different home buying path. If the numbers make sense for you and you are able to afford to buy now, then NOW is a good time for you to buy! You'll potentially have less competition due to an increase in mortgage rates causing some buyers to put their search on hold. By the way... you can always refinance your mortgage when rates go down in the future. Don't let market uncertainty delay your goals.
One of the biggest challenges in the housing market today is how few homes there are for sale. However, there are more options to choose from than there were at this time last year. Here’s what that means for you.
The Number of Homes for Sale Is Up from Last Year, but Below Pre-Pandemic Levels During the pandemic, housing supply hit a historic low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just weren’t enough homes available for sale to meet buyer demand.
Today, the supply of homes for sale has increased by 65.5% compared to this time last year. That’s a welcome increase for buyers, but it’s important to note that housing supply is still below where it was in the years leading up to the pandemic. In a recent report, realtor.com explains: “While the number of homes for sale is increasing, it is still 43.2% lower than it was before the pandemic in 2017 to 2019. This means that there are still fewer homes available to buy on a typical day than there were a few years ago.”
What Does This Change Mean for You?
Here’s the good news: an increase in the number of homes for sale means you have more options for your search. Not only do you have more options to choose from, but sellers may be more willing to negotiate with you than they were over the last couple of years.
Just keep in mind, while a rise in home inventory is welcome, inventory is still lower than a more normal year in the housing market. That means it’s still important to lean on your expert advisor for advice on how to navigate your local market. This can include being flexible and open to negotiations, balancing your wants and needs in a home, and taking the right financial steps to be confident in your options.
Housing supply is still well below pre-pandemic norms. However, as buyer demand has slowed, inventory has started to grow. Let’s connect so you have the latest information on the homes available in our local market.
Although experts project any recession for the housing market would be short and mild, as recession talk grows this year, you may be wondering what it could mean for the housing market. Here’s a look at the historical data that
shows what’s happened in real estate during previous recessions.
A Recession Doesn’t Mean Falling Home Prices The 2008 housing crisis can lead many of us to connect a recession with home prices crashing. But home prices appreciated in four of the last six recessions in this country. So historically, when the economy slows, it doesn’t always mean home prices will fall.
A Recession Means Falling Mortgage Rates. So, how does a recession affect the cost of financing a home? Historically, each time the economy has slowed down, mortgage rates declined.
Fortune also explains mortgage rates typically fall during an economic slowdown: “Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.” The big takeaway is, you don’t need to fear the word recession when it comes to the housing market.
According to historical data, in most recessions, home values have appreciated, and mortgage rates have declined. If you’re thinking about buying a home this spring, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.
If you're trying to decide whether to rent or buy a home, consider this:
“The success of your homebuying journey largely depends on the company you keep. . . . be sure to
select experienced, trusted professionals who will help you make informed decisions and avoid any
pitfalls. . . . It's important to choose the right team members for you — professionals you can trust and provide the knowledge and services you need.”
- Freddie Mac
Quality is never an accident; it is always the result of sincere effort, intelligent direction, and skillful execution. Let's get started.