Friday, October 14, 2022 / by Jake Uriegas
Average mortgage rates are sitting above 6%, nearing 7%, and continue to cool record-breaking home prices amid stubbornly low inventory - which means both good and bad news for those in the real estate market.
Big picture, I believe the market will continue to lean toward sellers this season, although it won't be as hot as what we've experienced over the last two years. Mortgage rate hikes are primarily responsible - hitting loan affordability and putting the brakes on home appreciation values, which are expected to be in the single-digit range for 2022.
With fewer homes being snapped up, inventory is still stunted by buyers hoping to wait out high prices and mortgage rates, while sellers are wary of letting go of their low-interest rate properties.
There is the possibility of a considerable home price reduction on the horizon, meaning millennials – responsible for over a third of last year's home sales - could get back in on the action soon as those prices drops hit their radars.
But with prices still high and rates on the rise, are we headed for a market crash? No, not according to the current market indicators.
2022 prices were sent skyrocketing by first-time millennial homebuyers driving massive demand in the wake of COVID-hit 2020.
Once those prices fall back into range and supply eventually catches up, we won't see a massive selloff or prices bottoming out, more a return to pre-2020 conditions – and a new generation of homeowners.
So, no bubble ready to burst, just a demand hangover slowed by higher mortgage rates. But there are plenty of buyers out looking and inventory is still needed.
As the market continues to SHIFT, I will keep you updated as new information presents itself.
Mike Mazyck Realty
Photo by Pixabay