The real estate market has been on fire recently, so you may understandably be wondering if now is a good time to jump into the market as a buyer. The spring season is typically a busy time for the housing market, but will this year be different? After all, in many markets, you will find lower-than-normal inventory, and interest rates have been rising. How do these and other factors play into your decision to buy a new home this spring?
Home prices are continuing to rise rapidly, but many homeowners have not been inspired to sell their homes. More than that, the demand for homes is solid. One reason for this is because Millennials are starting to settle down, and they need living space for their growing families. In addition, many older homeowners want to tap into their expanding equity to downsize to a smaller home. This is creating a tight market. With fewer homes on the market, you can expect competition for those homes to be fierce.
The good news for buyers, however, is that market conditions may be changing soon. Some potential sellers have been sitting on the sidelines because of pandemic-related uncertainty. As the pandemic cools down and the spring market kicks into gear, some homeowners may be motivated to list their homes. At the same time, new construction continues to be steady. As more inventory becomes available, competition in the housing market may ease slightly.
It is important to note that interest rates are on the rise. As interest rates increase, buyers lose some of their buying power. This means that t. may be a general decrease in demand, but demand may increase for more affordable homes. In addition, rising interest rates can put some downward pressure on housing prices. Nonetheless, the impact of rising interest rates over the next year is expected to be relatively minimal.
Consider that the year-over-year average home value in January 2022 increased by 20 percent. Some economists believe that home prices will increase another 17 percent by the end of 2022.
You can see that many moving parts influence the housing market in various ways. While some factors have a positive impact on buyers’ activity, others are more favorable to sellers. What does this mean for you? While these are major factors that impact the market, other factors may come into play as well. It can be difficult to accurately predict what the housing market will do, but many experts believe that the market will cool only slightly and that housing prices will continue to rise relatively quickly. Are you ready to start your search for a new home? The first step is to get prequalified for a mortgage and to learn what your price range is. Contact the MortgageDepot lending team today to request a prequalification.
Connect with one of our loan consultants to learn more.