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Current Housing Market

Good News for Seller’s – We are Still in a Seller’s Market and Home prices are holding near record highs, but sales have slowed slightly. Nationwide, Redfin Reports that roughly 60,000 home purchase agreements fell through in June or about 14.9% of homes that went under contract in June. In our brokerage we have been fortunate and only had one contract cancel recently but this could be an indicator of things to come. Redfin reports this number of cancelled contracts is the highest percentage since March and April 2020 when Covid 19 ground the housing market to a halt.

There are a number of reasons that contracts fall through, inspection issues, a life event, and now the main reason, rising mortgage rates are forcing some buyers out of the market. If rates were at 5% when an offer was made but reached 5.8% by the time the deal was set to close, the buyer may no longer be in a position that allows them to qualify for a loan.Since the housing market has cooled in recent weeks, as the Federal Reserve has boosted interest rates to quell inflation, house hunters have a bit more freedom to seek concessions from sellers, but higher rates also make housing less affordable.

Bottom Line, if you find a house you love, make an offer, and joyfully enjoy your new address. Historically home values hold and if you remain in a home for over 5 years, and you love living in it, you cannot go wrong. 

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What Inflation Means to the Housing Market

Inflation is Up.  But since our last housing market crash in 2007 we have many protections in place to prevent a crash similar to the crash we experienced in 2007.  In the old days, “anyone with breath in their bodies could get a mortgage” but not so today.  Underwriting standards have been improved and lending laws are much stricter in 2022.  In fact, it is not easy to obtain a home loan due to the strict guidelines and the verifications all lenders apply to all loan applicants. Housing and interest rates are up due to the economy, but at this date, the market remains steady. 

The Plus side, all Homeowners have record amounts of equity this time around.  Even if prices were to drop, which is not expected, lots of equity has been built up to protect the homeowner.

So, what can we expect, well with inflation and rates rising, the housing market can expect a slow-down. 

If you are planning to buy a home and want to gauge how inflation and higher rates will influence your goals, reach out to a mortgage professional and they will crunch the numbers for you. 

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Housing Predictions for 2022

Everyone is making predictions about the housing market, will the market rise, will the housing market fall, will the housing market crash or will prices remain static.  Of course, no experts can predict the market with complete accuracy, but it is HIGHLY UNLIKELY that housing prices will drop in the U.S. in 2022.  The most recent predictions, based on facts, see home values continuing to climb through this year and into next. However, many experts advise we will see smaller price gains this year, compared to the gains from 2020 and 2021.  The experts are predicting that U.S. housing prices will rise in 2022, but only by about 4%, so clearly a cooling trend is expected, but the market is expected to remain strong.  All the experts studied seem to have the same outlook, except for Zillow.  Zillow is predicting a rise of about 12% in home values in 2022, and they have based this prediction on the ongoing housing shortage.

 

Housing supply in the U.S. remains below normal levels, even with the massive amount of building all around us.  Housing Inventory was tight before the pandemic, and the inventory only became tighter due to the unexpected rise in home sales.   Two factors are cited that could possibly reverse this trend.  One is inventory growth which could balance the shortage thereby reducing home price appreciation.  The second factor that could cause a cooling effect on the market is affordability, or the lack of affordability.   Many U.S. Cities are becoming unaffordable to an ever-growing number of residents thereby reducing the number of buyers.  In Solivita we do not have this issue as our housing is still affordable and our community is almost built out to capacity making it impossible for Solivita to overbuild.