Will the real estate market collapse soon?
Real estate experts have been optimistic about the future of the US real estate market for several years. However, the real estate prices and sales in 2021 showed that it is no longer a rosy picture.
Many real estate experts who weathered the post-pandemic global economy are still optimistic about 2022. According to Zillow, the year-over-year rate will peak at 21.6% in May and close the year at 17.3%.
The real estate market might not crash in the year 2022. The present patterns and forecast for the next 12 to 24 months imply that the housing market will most likely continue strong, with many of the characteristics that catapulted real estate to record heights last year continuing this year.
Last year, homeowners experienced a market where their homes sold quickly and regularly above their asking prices, as several house buyers competed for the best deal.
The housing industry was coming off an unsustainable 18.8% spike in home prices in the United States last year.
Will the market continue to grow this year, or will it be slower?
The housing market is even tighter now than before the property bubble burst in spring 2021. Even industry heavyweights like Zillow raised their optimism in January, raising their forecast home price growth rate for 2022 to 16.4%.
In 2021, the housing market was robust, with significant demand for properties in practically every corner of the country. In 2022, a similar pattern will emerge.
Construction and building may increase
If there has been a bright spot within the US real estate market over the last few years, it has been the rental market.
Most people have realized the multiple benefits of renting and why they should prefer renting to owning houses. There is more flexibility with the commitments, and you’re entitled to a higher level of finishes and amenities. This demand for apartments is going to outperform the supply.
After a few challenging years, the market for brand new constructions is likely to come back with a bang in 2022. Slowly but steadily, the properties are selling, and brand new properties are breaking in. According to Zillow, there has been encouraging sales, and they believe there will be an uptick in 2022.
The real estate experts predict that the buyers will purchase houses for an extended period in 2022. According to recent studies, an average person moves about 12 times, but thankfully this number is also likely to decrease.
Most people who harbor the idea that buying a home is beneficial for short-term money-making will be practically gone, and people will buy a house to stay in it for the next ten years, rather than two or three years.
Will interest rates on home mortgages continue to rise in 2022?
The mortgage rates would rise in the United States. The average interest rate for the most popular 30-year fixed mortgage is 3.84%.
According to the National Association of Realtors, the 30-year fixed mortgage rate will be 3.9%. The economy is still growing strongly. In January, employment growth in the United States surpassed forecasts, despite a statewide COVID-19 outbreak that set a new record.
As per the monthly payroll report released earlier, the Labor Department stated that payrolls increased by 467,000 in January.
Although economic development is on the rise, inflation remains a significant problem. Increasing mortgage rates should help halt housing prices, making homeownership more expensive for individuals who take out a loan.
While interest rates were meager during the COVID-19 epidemic, rising mortgage rates imply that the United States will not experience a housing meltdown or bubble in 2022. If you are a first-time homebuyer, avoid mistakes. Make sure that your fixed interest rate is 3.5% or less when buying a property. You might want to keep a credit line active at today’s low rates as a rainy day option.
The real estate market is susceptible to rate fluctuations. You can afford to take on more debt when interest rates are kept extraordinarily low since the monthly payments are less expensive.
While mortgage rates are expected to climb in the following months, they are not likely to rise significantly, so it may be worth it to wait until there are more options later this year or next year. However, keep in mind that when house values rise, waiting longer corresponds to higher pricing.
Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003.
He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a Principal Attorney.
Photo by Dillon Kydd