August 15, 2022

What To Expect From The Housing Market Summer 2022

The housing market is always in some state of flux, but right now, it’s one of the toughest markets for buyers in history. A recent Gallup Poll shows that 69% of respondents agree that now is not the time to buy a house, which is the first time this has happened in the history of the poll. For the past several months, the market has been in favor of sellers, which means the houses in the market will likely go for much higher prices than they normally would. If you’ve been thinking about buying a home, you might want to wait.

What to Expect from the Summer Onward

The trends we’ve seen thus far should only continue to escalate. Right now, there are only a few homes in the market, interest rates are going up, and the number of new homes being built isn’t impacting the demand for homes. Does this mean it’s a bad time to buy a home? Does it mean you should sell your home? The reality is if you can sit tight and stay in your home, you might want to consider this course of action instead of buying or selling a house.

Things Could Cool Down

The summer months will likely be in flux in the housing market, but after September, you might see some changes that help things normalize. Some of these are:

  • The rising interest rates are making some potential buyers turn away
  • Its no longer a good time to refinance mortgages
  • The new construction market has nearly reached the affordability limits
  • Rents aren’t rising as fast as they did last year

What should you do? That depends on which part of the housing market applies to you; let’s take a look.

Do You Think its Time to Buy a House?

If you’re considering buying a house, get ready for some serious disappointment unless you have a ton of flexibility or luck. Mortgage interest rates are still at a historic low, but they are on the rise. There are houses in almost every neighborhood for sale, but these houses are being scooped up quickly. Many shoppers might make offers on homes only to find there’s extremely fierce competition to buy each home. Most homes in metro areas are selling at a median price that’s much higher than last year. In fact, some markets report that houses are going for tens of thousands of dollars above asking prices.

The total cost to buy a house is much higher than it’s been in a few years, and many buyers find they have to offer some concessions instead of getting them in order to entice sellers to pick their offer. There are still first-time home buyer programs that might allow you to buy a house at a monthly price that’s lower than what you might pay for rent.

Will you Sell Your House This Year?

The time to get record offers and sell your home as-is will end soon. The prices of homes are beginning to stabilize, but that doesn’t mean sellers will lose at all. The current home value appreciation rate should drop at some point, and then the housing market will move back to an even keel between buyers and sellers.

The challenge in selling a house is the fact that most sellers turn around and become buyers. You’ve got to have a place to live, and that’s one of the challenges. Unless you’re building your new home, it’s hard for you to sell your house knowing you’ll need to turn around and buy one that might cost a lot more than it should.

Supply Chain Issues Impact New Construction Homes

Houses are going up all over the country, but these homes aren’t getting finished. While you might find the items you need for a home project at the home improvement store but contractors have a serious problem getting the stuff they need to finish a home. This is part of the supply chain problems that impact several industries around the country. Yes, the pandemic hit the housing market and created a problem for builders.

The increase in interest rates creates a feeling of overall uneasiness about the market and how sales will happen over the next six months. The question that needs to be asked is whether or not finishing the homes that have been started will be worth it in the long run. These homes need to get finished, but it might be a while before some of them are sold.

Rent Prices are Leveling Off

The year-over-year increase in rental costs is up significantly, but the month-over-month increase in rental prices is only up a tiny bit. Putting this into numbers, a two-bedroom apartment has risen 13.9% in one year, while compared to a month ago, the average price is up 0.7 %. This shows rent increases softening, which is a good thing.

Renters can’t expect to see prices come back down now or anytime in the future. Most rental costs will go up and stay up, even if the housing market for buying is significantly different. The only way renters can find relief in the cost to rent an apartment or home will be to buy a home. If vacancies become the norm, then landlords might lower the rent prices, but don’t expect that to happen while there’s a shortage of homes to buy.

Which Situation Are You Facing?

The housing market is going to level off and become more normalized in the near future. This doesn’t change the fact that builders don’t have the materials needed to finish the homes they are building. If you’re in the market to buy a house, you need to strike quickly before the interest rates continue to rise. If you’re ready to sell your house, you’ll want to have your next home locked in before you sell. The market is about to flatten, which might be a signal to most people to stay put and wait for it to be in their favor once again.

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