February 8, 2023
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Rising interest rates, higher inflation, and supply chain issues look to affect potential home buyers this Summer. Combined with the bounce back from Covid-19, it may be a bad time to consider buying a home.
Houses have been selling for well over asking price for over almost two years now, and it’s hard to predict for certainty when the housing market will go back to normal. However, experts are suggesting that we may not see the housing market stabilize anytime soon. On the other hand, Summer 2022 might be the perfect time to put your home on the market.
According to Zillow, we won’t see record-high prices this Summer, but they may come close, especially in certain areas. We likely won’t see 2021’s record breaking high prices broken this year, but prices won’t come down too much either. In fact, Zillow is forecasting an 11% home value growth for 2022. Compared to 2021’s 19.5%, it may not seem like much of an increase, but it’s still bad news for those looking to purchase a home anytime soon.
Even prior to Covid-19, there was low housing availability in America. Covid-19 slowed production, increased demand, and gave people a reason to purchase a new home – remote work. Covid-19 didn’t begin housing scarcity, but it certainly didn’t help it either. Builders are now ramping up production due to increased prices, but it may not be enough to stabilize the market for years to come.
Zillow admits that a seasonal cooldown period is on the way post-Summer, but it won’t be anything like previous years. Homes are still staying on the market for an extremely short period of time, and rentals are still in high demand. They even predict bidding wars will further increase the price of both vacant properties and completed homes.
Inner-city housing has always been expensive, and many young people are being priced out of the that particular market. This means they are turning to rural homes as their first or even second home purchase. Remote work is still prominent in the workforce, and this is further incentivizing young people to make rural purchases. They don’t have to drive to work every day, so long commutes aren’t an issue. This caveat is expected to lower house stock even in the most rural locations.
Interest rates are sitting at around 5% right now, but it’s expected that they will increase several times over the next few months. Many are predicting rates as high as 5.5% by the end of the year. This will further increase mortgage rates, meaning it will cost people looking to purchase homes even more in the long term without benefitting sellers.
Experts say the housing market isn’t likely to crash in the coming months. Despite this, due to increased inflation and the largest Fed rate hike in over 20 years, many people are still hesitant to put faith in the market.
In addition to these issues, Goldman Sachs is only predicting a 1.75% increase in America’s GDP this year, giving the economy a 35% chance to go into recession. This of course would negatively impact the housing market, decreasing prices substantially.
It’s certainly not easy to find an affordable home right now. Nonetheless, homes are flying off the market almost as soon as they go up for sell. This is bad news for people looking to move or purchase a second home, and it’s great news for those looking to sell. Experts predict that the housing market won’t see any drastic increases this year, but they don’t expect prices to come down anytime soon either.
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