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.