According to the National Association of Realtors (NAR), every month this year has seen an increase in the median home sales price, which reached a new height of $413,800 in June before dipping slightly to $403,800 in July. A Prime Lending mortgage allows you to make your payments easily no matter the price of the house.
However, compared to a year ago, the price of existing homes sold in July was about 11% higher. According to the Mortgage Bankers Association, increased housing expenses have hurt home buyers as mortgage applications are at their lowest level in 22 years.
The overall state of the economy and consumer confidence have contributed to the present shift in the housing market.
On the other hand, consumer spending and the employment market are still doing well.
Will Home Prices Continue to Rise?
Housing affordability is eroded by inflation, high mortgage rates, and record-high property prices. According to a Zillow analysis, the average monthly mortgage payment has increased by 76% since June 2019.
Additionally, incomes are not keeping pace with the increased costs. Although earnings increased 5.2% in July compared to the same month the previous year, they lagged behind the 8.5% rise in inflation.
Home prices aren’t expected to decline any time soon, according to MBA economists. They predict prices will rise annually by 9.9% in 2022 compared to 2021 and by 3.1% in 2023.
Although we cannot predict the exact condition of the housing market, a fall in price seems incredibly unlikely. Prices are still rising due to the high demand and little supply of available homes.
The cost of living crisis is one of a few variables that might temper the rapid rise experienced in recent years. Most households now have less disposable money to spend on home purchases due to record-high gas and electricity prices, growing inflation, and tax increases.
Should I Purchase a House Now or Wait?
In any market, purchasing a home is a very personal choice. Homes are typically the biggest single investment a person will make in their lifetime. Therefore it’s important to have a strong financial foundation before making a purchase.
To determine your monthly housing costs based on your down payment and interest rate, use a mortgage calculator.
It’s not a good idea to time the market or predict what will happen the following year when purchasing a home. Instead, it’s best to make purchases based on your needs and budget.
It’s possible that a house you like in a neighborhood that also meets your budget is the one for you. However, if you give up too much to buy a house, you can experience buyer’s remorse and wind up with a costly albatross that you have to sell.
Buying Advice for a Hot Housing Market
Commit yourself to keeping to the budget you establish at the outset. Buyers still have to contend with high prices and mortgage rates in the high 5% range, despite a minor increase in the number of homes for sale.
The mismatch between buyers and sellers, according to Rita Tayenaka, owner of Orange County, California-based Coast to Canyon brokerage, is currently the biggest issue. “Sellers want last year’s pricing, and buyers want to undercut each other.”
Although there is now a little more breathing room for buyers, they should also keep in mind that the market is still one in which sellers now hold the upper hand.
Selling Advice for a Hot Housing Market
Finding a listing agent who is knowledgeable about the area and comes highly rated is the first step in a successful sale. A good realtor will work closely with you to establish a fair asking price for your house while addressing inquiries and bids from potential purchasers.
It’s in your best interest to present your house in the best possible light even though the market may still be in your favor.
Even though not everyone has money set aside for improvements and repairs, a little labor can go a long way. Cleaning, organizing, and decluttering are the initial steps.
Stacks of invoices and receipts should be put away, toys should be put away, and your kitchen should be clean. A fantastic technique to make your home feel airy and light is with bright lighting.
House Price Predictions
Numerous home market forecasts are still upbeat because of the ongoing competition for space. But the perfect storm of increasing interest rates and rising inflation is expected to cool the property market.
Here are some forecasts for the future:
- The Bank of England forecasts that this year’s house price will slow down, and mortgage lenders anticipate reducing their lending as the economy struggles.
- Rightmove, a real estate company, predicted that house price growth would decelerate to 7% in 2022.
- Wesley Davidson, a company’s founder and mortgage broker, predicted a 10% decline in the average home price over the following year in July 2022.
- Real estate broker Hamptons anticipated a rise in home prices of 3.5% in 2022, 3% in 2023, and 2.5% in 2024 in September 2021.
- According to the real estate firm Cluttons, prices in some areas of London could drop by as much as 10% in the upcoming year.
- Foxtons forecast growth in London of 1% to 3%.
The real estate market is anticipated to maintain its rising trend in the near future. But since mortgage rates will rise due to strong inflation, the property market will probably contract by the end of the year and into 2023.
The Demand for Rural Areas
The demand for homes outside of cities has increased as working from home becomes a more regular feature of many people’s lives.
According to ONS statistics, lockdowns emphasized the significance of greenery and space, sparking a boom in interest in rural and coastal houses. Some areas have seen three times the national growth in house prices.
Scotland’s rural and isolated estates are attracting a lot of interest, according to estate brokers.
The average price of real estate in cities and commuter belts has increased as a result of some individuals beginning to move back there.
In 2022, will housing prices fall?
Although annual house price growth is still high, some data indicated that monthly house price growth has been slightly negative. The increase in home prices may decrease further if demand weakens and individuals put down lower payments.
While a crash appears improbable, the strain on household finances brought on by the cost of living crisis may cause house price growth to slow down. Contact your home loan provider to take advantage of the slow down!
