Whether you are considering a local move or looking at a long-distance move, the current housing market is probably a source of stress and uncertainty for you and your family. Regardless of if you are a buyer or renter, housing costs have been skyrocketing all across the country and provide a significant complication if you are looking to relocate soon. Thankfully, we are here to help you in your decision-making process! Here are 5 things to take a look at regarding the current housing market.
- Inventory Is an Issue: With remote work on the rise, even more buyers are affecting a housing supply that was already low. If you are just starting your search, be mindful that the days of flagging properties to keep an eye on them or haggling over the price of a rental are, more or less, over. As of November, the number of houses actively in the market was at a record low and that number has not been picking up in the first quarter of 2022. Although you should not overpay or rush into a major purchase like a home, in the current market, make sure that you have your financing in order and know what you are looking for so that when you find it, you are ready to act quickly!
- Interest Rates Are Increasing: Considering that inflation is hitting multiple areas of American life, it is reasonable to assume that the Federal Reserve will continue to raise interest rates and that this will affect mortgage rates. Although higher mortgage rates mean paying more for your mortgage, its not all bad news if you are in the market to buy a new home. Higher mortgage rates will also work to move speculative buyers out of the market so that the market is a truer reflection of those who are actually in the market to purchase a home for themselves.
- Prices Will Continue to Sizzle This Summer: Unfortunately, if you are a buyer at least, economists and real estate professionals agree that interest rate rises aren’t likely to cool off the rise in prices as we get into the summer months. As summer is already the time of year that 75% of moves occur, the compounding issues of tight supply and elevated demand will serve continue driving prices upward. Although below the 2021 growth numbers, many experts predict a growth in home prices of around 11% this year. So, if you are looking to move and hoping for a slowdown, you might be left with a higher interest rate and a paying a higher price, so don’t count on a downturn this year.
- Renters Rates Are Rising Too: As you are probably aware, rent increases are following the spike in home values and hitting the rental market hard. Although it is tempting to look for new opportunities if presented with a large increase in rent year over year, be sure to not overreact. With Covid uncertainty, many properties did not increase rent, so you could be seeing an increase that accounts for 2-3 years of rent increases. Also, if you try and find something comparable to where you are, you may find that the market is less friendly than your current accommodations.
- Young Buyers, Beware: Millennials, who, historically, should be at peak home buying age will continue to be at a disadvantage compared to older generations. Unfortunately, the combination of student loan debt, stagnant wages, and Boomers staying in their homes longer than previous generations is working against first-time home buyers. As medical science improves, and housing supply is still relatively low, don’t expect this problem to improve soon. If you are in the market to buy and have the capital, it might be best to even lower your budget or pull the trigger on less house because you are looking at a problem that will not be getting better in the near future.