Written By • Goldee Payton • CLT's Finest Properties • www.cltsfinest.com
The last two years have been a bit crazy to say the least. It isn't just the pandemic that created a stir. The real estate market has been one of the hottest in history and has broken some records. Home prices have continued to increase since 2021 and while many hoped things would level out a bit in 2022, the U.S. real estate market continues to boom, despite rising interest rates and the fact that homes are continuing to be less affordable.
No.1 • Increase in Mortgage Rates
Even though interest rates are up slightly this year, they are still good. I doubt we will see them go back to 2%. Some debate that they should have never been that low to begin with. While only a few predicted they would rise as quickly as they have, mortgage rates have continued on an upward trend. We may see buyers spring into action to secure a lower mortgage rate and therefore continue to make inventory a challenge. On the other hand, we may see sellers put their homes on the market in an effort sell before homes become too expensive and the buyer pool is diluted.
No.2 • Inventory at All Time Low
One of the biggest challenges over the last year or two is how low inventory is. As of 2021, nationally the shortage of homes hit 5.8 million. (Source: Realtor.com) While builders attempt to increase housing construction, roadblocks like the increase in cost of materials and even supply chain shortages, continuing to add delays and pass along the increase in costs to buyers. This all leads back to home prices rising!
No.3 • Home Prices Rising
While home prices will more than likely continue to rise as interest rates do. We should see it be a more gradual increase, which is a sign of a little healthier market. While many predict that we will not see home prices decrease, since inventory continues to be a factor, sellers could find themselves with a good amount of equity.