This is what economists and real estate experts expect to happen in the housing market in the coming months.
There may be less competition for higher priced homes
Mortgage rates are on the rise. For the first time since 2011 mortgage rates on a 30-year fixed-rate mortgage hit 5%, and pros say they may keep going up. The increase in mortgage rates means that homebuyers will have to adjust their expectations, and begin shopping in lower price ranges. This means we might see less competition for higher priced homes and more competition for lower-priced homes.
Rising mortgage rates may force some buyers out of the market
Rising interest rates mean many buyers will be forced out of the market because of a hit to affordability. With interest rates now at 5% a buyer’s monthly mortgage payment will be higher.
Home prices will keep going up, but growth will slow somewhat
CoreLogic and Fannie Mae predict that home prices will go even higher over the coming year. But the good news for buyers is that home price growth may slow somewhat in 2022 due to pullback in demand as enough buyers hit an affordability ceiling between rising prices and mortgage rates. That does not mean that it will become a buyer’s market anytime soon, according to experts.
Some employees may face difficult decisions about returning to work in person, and that may impact their housing choices
As pandemic restrictions fade and we emerge into a new normal we are likely to witness broader improvements in consumer activity. While companies shift back toward an office environment the success of remote work over the past two years has not only redefined employment culture and expectations, but also led to consumers seeking more affordable housing farther from downtown areas. It’s possible that some people who thought they wouldn’t have to return to work in person will actually have to, which means we could see people moving from the more outlying areas where they purchased homes back to more urban areas. It is most likely to continue to be a seller's market.