What To Expect From The Spring Housing Market

The Bureau of Labor Statistics (BLS) reported that inflation rose again in February, making it the highest in 4 decades at 7.9% year over year. In March, you may expect the Federal reserves to start raising its benchmark short-term interest rates to address high inflation. In December 2021, the average 30-year fixed mortgage rate was issued at 3.11% and increased to 4.05 % in February 2022.

Currently, mortgage rates are 1% higher than what they were at the same time last year; this has been brought about by several economic factors that are pushing the interest rates up this year. This 1% increase is likely to dent your purchasing power significantly.

Spring Housing predictions

During the pandemic, the demand for housing skyrocketed due to either a combination of recession-induced low mortgage rates, remote work making it convenient for you to move further away from their workplaces, unemployment, and a demographic upsurge of first-time homebuyers entering the market.

The annual home price growth rate peaked at 20% in August 2021 after increasing steadily during the pandemic. Forecasts by Zillow expect the year-over-year rate to peak at 21.6% in May, which would be an all-time high, and to stabilize at 17.3 % by the end of the year. You realize that this is four times greater than the average annual rate (4.2%) recorded over the past four decades and even more than the 14.4 % recorded in the years leading to the housing crash of 2008.

This means that if you are buying a house this spring, you will need to dig deeper into your pocket or expect more if you are selling.

The supply-demand analysis of the property market shows that a boom in home prices continues to soar but not as seen in 2020 and 2021, and it is likely to cool off slightly. The increase in prices is likely to make you withhold your need to purchase a home at the current prices or stop buying altogether, depending on how much you can spend comfortably and other factors, including whether you can continue to work remotely.

Factors That are likely to Continue Affecting the Housing Market

The following factors, among others, continue to dictate the spring housing market;

: It is expected that the imbalance between demand and supply with continue to persist.

Prices have skyrocketed as the number of homes in the market continues to be lower than the number of buyers. Therefore, any house on the market is sold to the highest bidder. This trend will continue to hurt buyers. It will continue to push most buyers out of the market, especially if they are not willing to pay the current prices or can’t comfortably afford them. If you wanted to purchase a home in 2021, The median price of a home was $ 346,900 (a 16.9 % increase from 2020. This amount is expected to increase between 5.6% and 6.6% in 2022.

Increased Mortgage Interest rates: Mortgage interest rates are expected to continue increasing in the housing market. When mortgage rates increase due to things such as rising inflation and consumer spending, it directly affects your ability to afford and finance a home. These high inflation rates may push the federal government to raise its benchmark short-term interest rate, hence increasing rates for lenders, who increase the borrowing rate.

The increase means; you have to increase your monthly payment amount besides the taxes and other charges; you have to investigate, read and understand the mortgage keenly you intend to take. Use a mortgage calculator to determine what works best for you.

Bottom Line

The price of houses is expected to continue rising; however, it doesn’t mean you have to give in to fear of missing out or panic buying. Set a realistic and affordable budget and stick to it. If you are selling, take your time upgrading and doing the necessary repairs; use a real estate professional who knows your target market and trends.