Real estate experts are predicting home prices will slowly begin to regulate, following a season of record-high growth.
Potential buyers who have been waiting for a home they can afford probably won’t see immediate relief, or a buyer’s market, in 2022, but experts believe there are certain signs that point to a healthier market ahead.
To predict the housing market’s direction, experts dissect a number of factors, including price increase percentages, average listing prices, and a number of days on the market.
The number of unsold homes rose 3.3 percent from May to June, and mortgage applications have dropped to an 18-month low.
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While these numbers may seem low, it has made a difference. Sellers have had to respond accordingly by reducing prices to meet demand.
These are normal patterns in the housing market, but due to the abnormal growth as a result of the pandemic, experts are keeping a closer eye on where things are headed.
Will housing prices drop?
Experts are quick to point out that these fluctuations don’t mean significantly lower prices are coming soon — just that slower growth is apparent and should continue into 2022.
In April, Realtor.com showed home prices were up 17.2 percent compared to the previous year. The Mortgage Bankers Association predicts 2022 price increases will be in the 5 percent to 7 percent range.
While these comparisons seem significant, experts say it’s more balance-seeking than a sharp price drop.
The rise in the number of more affordable homes that land in a median price range is a good sign, but the numbers show that housing supply is still too low overall.
However, experts say if homeowners notice the “For Sale” signs in the neighborhood are hanging around longer, this is an indication that a seller’s market is starting to slow down.
Where will rates land?
While home prices may be heading down, mortgage rates are expected to continue rising into 2022. This increase also will help balance the housing market.
The Mortgage Bankers Association predicts rates will be around 3.3 percent in the first quarter of next year, and possibly rise to 4 percent by the end of the year.
Experts advise that those looking to take advantage of current rates should act fast, and if they see a home they like at a price they can afford, they should act even faster.A mortgage lender can help those looking to purchase a home or refinance to find the best loan type, rate, and terms for their needs, regardless of the market’s constant fluctuations.