Housing Market Predictions for July 2022
Housing Market Predictions for July 2022
The cost of buying a single-family home jumped more than 20% nationwide in April from the same month last year, according to the latest S&P CoreLogic Case-Shiller Index. Higher mortgage rates added to the cost of buying a home, as they rose sharply in May; however, those big spikes may level off.
Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors (NAR), says rates should average around 5.7% by late 2022.
But these higher costs are putting pressure on the housing market. The Mortgage Bankers Association (MBA) recently reported that a steep decrease in mortgage applications to buy and refinance “pushed the market index down to its lowest level in 22 years.”
As we head into the typically active homebuying summer season, experts chime in on what we can expect from prices and rates.
Will Home Prices Rise in Summer 2022?
Call it ‘hot home-price summer,’ as inflation, high housing demand and low supply continue to send costs skyward. Economists at Realtor.com recently revised their forecast for median sales price appreciation on existing homes to 6.6% in 2022, up from their previous prediction of just 2.9%.
Rising rent prices and now higher mortgage rates—which soared from an average of just 3.2% at the start of the year to 5.81% by mid-June—have driven up the cost of housing, pricing many people out of the market. This has caused home sales to begin falling as more people can no longer afford homes at the current heated prices.
For the fourth month in a row, existing-home sales dropped, sliding 3.4% in May from April and down 8.6% from the same period last year, according to NAR.
“The monthly [principal and interest] payment required for the average home purchase is up nearly $600 since the start of the year, and factoring in current income levels housing is now within a whisper of the record low affordability seen at the peak of the market in 2006,” said Ben Graboske, president of Black Knight Data & Analytics, in a statement. “Even modest increases in either rates or home prices at this point would push us over that line.”
Housing Inventory Predictions for 2022
Home prices might expand, but the options will, too, according to some economists.
The Realtor.com inventory forecast made a sharp change in course from the beginning of the year to now, going from just a 0.3% rise in inventory to their current prediction of a 15% jump in the for-sale housing stock.
“While housing costs remain high, pushing home shoppers to make tough choices about their budget priorities, the number of homes for sale is expected to continue to grow, building on the turnaround begun in May,” according to the Realtor.com report.
“As more homeowners look to make adjustments to fit changing personal needs and take advantage of favorable market conditions to access the significant amount of equity they have likely accumulated, home shoppers will have more choices.”
Should You Buy a Home Now or Wait?
Buying a house—in any market—is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to find out how much your monthly housing costs will be based on your down payment and interest rate.
Trying to time the market or predict what might happen next year is not the best homebuying strategy. Instead, it’s better to buy based on your budget and needs. If you find a home you love in an area you love and it also fits your budget, then chances are it might be right for you. However, if you make too many sacrifices just to get a house, you may end up with buyer’s remorse and an expensive albatross you have to offload.
Tips for Buying in a Hot Housing Market
Start with a budget and make a pact with yourself to stick with it. Even with a slight uptick in the number of homes for sale, buyers are still facing steep prices and mortgage rates in the 6% range.
“There are a lot of factors going into buying right now, and frankly, a lot of people are scared to make a mistake,” says Jennifer Baptista, a real estate agent at Fresh Starts Registry in Andover, Massachusetts. “As a seasoned agent, I ask my clients first and foremost, ‘What does your gut say?’ If the [timing] feels wrong, you will always find the wrong home, so just wait.”
Rachel Luna, the principal of Patriot Title in Houston, also advises buyers to slow down. The scarcity mentality in the market has driven people to make fast decisions, which can quickly turn into buyer’s remorse.
The problem is you can’t return the house if you realize you overpaid or just bought a place you don’t like. The seller’s costs can run up to 10% of the home’s sale price, so you could end up losing money if you turn around and sell it.
“Be patient,” Luna says. “What really matters when purchasing a house is your personal finances and long-term economic stability. Ask yourself: Are you debt-free? Do you have an emergency fund for three to six months of expenses? Will your monthly house payment be 25% or less of your monthly take-home pay? If you don’t comfortably meet these qualifications, it wouldn’t matter if the market is in your favor.”
Tips for Selling in a Hot Housing Market
The first step for a successful sale is to find a listing agent who knows the area and comes highly recommended. A good agent will work closely with you to price your home competitively while fielding questions and offers from prospective buyers.
Meanwhile, present your home in the best possible light. Not everyone has cash dedicated to renovations and repairs, but a little sweat equity can go a long way. The first step is to declutter, organize and clean.
Tuck away stacks of bills and receipts, store toys and make sure your kitchen is tidy. Bright lighting is also a great way to make your home feel spacious and light.
Even if your home is outdated, a clean space gives buyers a chance to envision the potential of the new home.