May 14, 2022

It Started: The Upcoming Housing Collapse – Round 2

Let's discuss the 2022 housing market, rising interest rates, and dwindling inventory - Enjoy! Invest with me at http://www.creatorproperties.com/ - see disclaimer below* - Add me on Instagram: GPStephan GET YOUR FREE STOCK WORTH UP TO $1000 ON PUBLIC &…

Let’s discuss the 2022 housing market, rising interest rates, and dwindling inventory – Enjoy! Invest with me at http://www.creatorproperties.com/ – see disclaimer below* – Add me on Instagram: GPStephan

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The 2022 Housing Market:
30-year mortgage rates NOW beginning to exceed 5%, application demand is dropping, lenders are beginning to trim their workforce, and, some even think that rates could hit as high as 8% by 2025….leading, of course, to the assumption that the housing market has peaked.

FIRST: RISING RATES
No matter what happens…the CME gives an 87% probability that the Federal Reserve will increase their key interest rates to 2-2.25% by the end of the year…which, is roughly 8x HIGHER than were we stand today, and – would lead to the “Sharpest Pace of Fed Tightening Since 1994.”

Long term, a survey from the New York Federal Reserve found that “most households expect the interest rate on a 30-year fixed-rate loan to increase to 6.7% next year and reach 8.2% by 2025” – although, the National Association of Realtors believes that the market has ALREADY factored in “all the possible rate hikes,” and therefore…we should expect to see around 5.5% mortgages throughout most of 2023.

SECOND: RISING INVENTORY
The chief economist of Realtor.com says that: “We may see a slower pace of sales in the fall, because rising mortgage rates are pushing up housing costs.”

Zillow believes that: “The stock of existing homes on the market is finally starting to refill, as our March data shows total inventory now rising strongly.”

Redfin states it might be a NET-NEUTRAL, because “higher interest rates will lead to a lock-in effect for homeowners, so they may not list. And it also might reduce demand from home buyers, especially for people really sensitive to prices.”

THIRD: HOME SALES
Throughout February, home sales actually DROPPED 2.7%…and, in March, they dropped another 4.1% – meaning, fewer buyers are purchasing properties now that mortgage rates are increasing. According to Redfin, 12% of homes on its site saw sellers cut prices in the week ending April 9. That was the biggest one-month spike Redfin saw in price cuts since 2015.

Although, in terms of my OWN thoughts on this…since, I have been FULL TIME in the real estate industry since 2008…I can absolutely see rising rates having an impact on values throughout the near future…but, LONG TERM…a lack of inventory, combined with decades of under-building, is likely going to keep prices relatively high for quite some time…even though, some areas will likely see the market BEGINNING to soften.

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