What the experts are saying about the future of home prices and rates.
Now that the end of 2022 is in sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a home. Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible:
1. Mortgage rates will continue to respond to inflation. There’s no doubt mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of October, with a drop then back in mid-November. In fact, it’s the first time they’ve risen this high in over 20 years. In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been: “Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”
“If inflation stays high, mortgage rates likely will too.“
Since we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.
2. Home price changes will vary by market. Since buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. At 1:48 in the video above, there’s a graph that shows home price forecasts for next year. Expert predictions seem to be mixed. The consensus is home price appreciation will vary by market, with more significant changes happening in overheated areas.
At 1:58 in the video, let’s take a local look at Tippecanoe County from September 2021 to September 2022: The median sales price is up 14.7% to $250,000, while closed sales are down by 5.6%. We are also starting to see the average list-to-sales price percentage on a slight decline. Finally, the average days on market is up to 19 days.
Some areas in our market may still see slight price growth, while others may see slight price declines. It all depends on other factors at play in our local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts. The bottom line is that the market is shifting on a monthly and weekly basis. If you want to know what’s happening with home prices, home sales, or mortgage rates, let’s connect. That way you have the latest data on what we are seeing in our Greater Lafayette area. Call or email me anytime.