Home prices are not expected to decrease until 2023. Houses have been more expensive than ever! Economists feel there is a slowdown coming for home sales in the latter part of 2022 and there will be a decrease in new construction.
There is a chance of a slight recession, according to economists. Mortgage rates will likely continue to rise, and this will reduce the amount of spending power a buyer has. Housing prices have not decreased. When mortgage rates go up sales usually go down. This makes it harder for people to purchase a home. People that already have a mortgage are less likely to sell their home for a higher interest rate mortgage.
In 2022 it is suggested that home prices will decrease by 6.7 percent. By 2023 there is said to be a 4.5 percent decrease in home sales. Mortgage rates have increased by 2.19 percentage points since December. This is a big increase for such a short time. This means that the average price for a home has increased by approximately $500 or more. A person can still lock in a mortgage rate and they can use this amount to purchase a home.
There has been a decline in 8.4 percent of new homes being put on the market. Higher interest rates are making people stop and think about the choice to become a homeowner.
Home price appreciation is predicted to drop to 3.2 percent by the end of 2023. Some regions will see more of a decline than others. This does not mean that homes will not sell. There is still a short supply in some regions.
Even if the price of homes does go down there is not predicted to be a recession like the one in 2008. In 2008 there was a problem with credit quality, foreclosures, and overleveraging in the financial world. These same factors are not happening today. Credit quality has improved, and the financial system is not as leveraged.
Rates have not risen as quickly this year as they did in 1981. It is predicted that rates will continue to rise and that mortgage sales will ease off slowly. The Federal Reserve is expected to raise short term federal rates a point at a time for as long as the labor market is still strong.
The unemployment rate is 3.6 percent, meaning that there are plenty of jobs and unemployment is lower than it was at this time last year.
Many households have little to no savings. Credit card balances are increasing, suggesting people are not able to make ends meet due to the inflation rates. There needs to be a relief in the price of food, fuel, and energy. It is possible that due to the higher costs, a recession is coming. If a recession does occur it will impact mortgage lenders that have been hit hard already.
With the rising mortgage rates, new mortgages are expected to fall by around 4 percent. This is trillions of dollars! Mortgage refinancing is predicted to fall by 69 percent ($797 trillion). Cash out refinances are said to be moving forward and may be on the rise.
