If you’re thinking of buying a home in today’s housing market, you may be wondering how strong your investment will be. You might be asking yourself: if I buy a home now, will it lose value? Or will it continue to appreciate going forward? The good news is, according to the experts, home prices are not projected to decline. Here’s why.
With buyers still outweighing sellers, home prices are forecast to continue climbing in 2022, just at a slower or more moderate pace. Why the continued increase? It’s the simple law of supply and demand. When there are fewer items on the market than there are buyers, the competition for that item makes prices naturally rise.
And while the number of homes for sale today is expected to improve with more sellers getting ready to list their houses this winter, we’re certainly not out of the inventory woods yet. Thus, the projections show continued appreciation, but at a more moderate rate than what we’ve seen over the past year.
While home price appreciation is expected to continue, it isn’t projected to be the record-breaking 18 to almost 20% increase the market saw over the past 12 months. Overall, it’s important to note that price increases won’t be as monumental as they were in 2021 – but they certainly won’t decline anytime soon.
With motivated buyers in the market and so few homes available to purchase, the imbalance of supply and demand will continue to put upward pressure on home prices in 2022. And when home price appreciation is in the forecast, that’s a clear indication your investment in homeownership is a sound one.
The biggest problem buyers will face come 2022 is the mortgage rate market. Federal Reserve Chairman Jerome Powell just announced that he foresees 3 rates hikes to the Fed Funds Rate in the new year. The Fed Funds Rate does not directly impact the mortgage rate market but it can cause other things, like the 10-year yield, to change thus changing mortgage rates. Powell says overall inflation running well above the Fed’s 2% threshold but is projected to fall to the Fed’s goal by the end of 2022.
According to the Mortgage Bankers Association, the average 30-year fixed-rate mortgage is at 3.30% today. That will hold steady for the foreseeable future. Our advice: make moves now to save money in the future.