What Are Your Worse Fears for the Rest of 2022 and Beyond?
What about a Housing Bubble?
There is not going to be a Housing Bubble thus, the Bubble will not burst as it did in 2008. Mortgages back in the early 2000’s begged for a burst in the Housing Bubble with the types of loans issued during that period. These loans included 100% LTV loans, no doc loans with credit scores of 580 and below – and packaging poor quality loans selling them on the secondary loan market. It was a hodge podge and a recipe for a burst.
Our current market is totally different. Not only are mortgages supported by solid buyers, but the housing inventory is lower than the glut of houses on the market in 2008. As long as demand outpaces supply, the market should remain stable.(The Close)
Inflation is Too High!
Yes, it is. We’re going to have a tough go at it, but home prices are still increasing, along with interest rates. According to REALTOR.com, “as mortgage rates climb, home sales are expected to slow, with housing price growth eventually following suit, but taking longer to do so than we originally anticipated for the year. One upside for buyers – they can expect to see more homes for sale.”
Even though all this sounds dismal, it may be your best time to buy your home – less competition than last year and more houses on the market.
Higher Interest Rates!
Yes, it looks by all indicators interest rates are still on their upward trajectory; HOWEVER, “Experts are forecasting that the 30-year, fixed-mortgage rate will vary from 4.8% to 5.5% by the end of 2022.” (Forbes)
According to National Association of Realtors (NAR) Chief Economist Lawrence Yun: “Mortgage rates may top 5.5% for a few months, but going to 6% looks unlikely. Most of the mortgage rate change from the expected Federal Reserve monetary policy change is already priced in. So future rate hikes by the Fed may have a less discernible impact on mortgage rates.”
So, even though interest rates are higher than they were at the beginning of 2022, you can still purchase your home and refinance when the rates go back down. However, if they continue to go higher, just think – you’re getting your home at a lower interest rate.
Are We Headed into a Recession?
It does look like we’re headed into a Recession, however, this may not be a totally bad thing in the housing market. We’re currently experiencing high interest rates to tame inflation. However, once we’re in a Recession, interest rates tend to decrease and mortgage holders with the high rates may have a chance to refinance at the lower rate.
The current housing market is stable and has strong values that don’t look like they will tank (lose value) as we saw in the 2000’s.
BUT THE BUBBLE!! My house will be less than what I paid for it!
No, most homes will not lose their value.
“So in 2022, the median age of a first-time homebuyer is 33 years old. That means they were born between 1988 and 89,” Barry explains. “With this cohort of people continuing to increase, there will be more demand for homes in the future.” (The Close)
“The current trends and the forecast for the next 12 to 24 months clearly show that most likely the housing market is expected to stay robust, with many of the trends that propelled real estate to new heights last year remaining firmly in place this year as well.”(Norada)
With many reports try to spell gloom and doom in the housing market, buying or selling a home is still possible and profitable. If you are looking at a lower interest rate, perhaps try an Adjustable Rate Mortgage (ARM) and refinance when rates are lower.
If you’re able of buying a home in the Desert with cash, this is the best time for you! You don’t have to worry about increasing interest rates and the value of your purchase will continue to increase the longer you own your home. Win – Win.
If you’re not sure or want more information, give me a call. Let’s discuss what is your best option and how to get started.