Home Prices Are High Right Now Should I Wait To Buy?

Table of Content

• Our Most Popular Articles
• Higher mortgage rates aren’t stalling home prices — here’s why
• Housing Market Predictions | Real Estate Market Forecast
• You’re not in any rush to sell
• Housing market question: Should I sell my house now or wait until 2023?
• The Federal Funds Rate is still climbing
• Top 10 Metros in the U.S. with the Fastest Growing Sales Price

It’s early yet to decide if home prices are on a downward trend. While home prices tend to have a seasonal downward shift as summer wears on, this year the numbers were larger than the average. Usually we see a decrease of 2% from June through August, but this year that decrease was 6%.

Housing market forecasts are essentially informed guesses based on existing patterns. While the real estate pace of last year appears to be reverting to seasonality as we approach 2022, demand is not waning. Freddie Mac's own regression research indicates that a 1 percent rise in mortgage rates reduces home price increases by around four percentage points . Morgan expect a greater impact of around six percentage points lower home price increase. Since then, thankfully, the conditions for lending have been relaxed a little bit, although the index is still relatively low.

Our Most Popular Articles

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According to the National Association of Realtors , existing home sales have fallen for nine months, and an inventory-depleted summer market is now rebounding, though with fewer buyers. Yesterday NAR reported pending October home sales declined for the fifth consecutive month. With that said, mortgage rates are pushing the demand for homes down tremendously. The volume of mortgage applications is down more than 50% this year, largely as a consequence of high lending rates. Many economists believe that continued pressure on mortgage rates may adequately rebalance the housing market, resulting in lower prices.

Higher mortgage rates aren’t stalling home prices — here’s why

And while some opportunities may be coming that would allow investors to shift back into drive, the overriding consensus is to keep the car in the driveway for now. Housing prices have been resistant to deflationary forces, largely due to the limited supply of homes in the U.S. and slowed real estate construction. Many analysts expect home price growth to reverse, or at least slow over the next year or two as a result of lower housing demand. After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%, according to a separate report by online brokerage Clever Real Estate, based on Census data.

The opportunity that was there last year has diminished, with homes sitting on the market longer. Sales on homes listed between $250,000 and $500,000 fell 14% from 2021 to 2022, partially because there’s less inventory in this price bracket with rising home prices. Mortgages are secured loans, which means they're backed by a specific asset -- the home that's being purchased. When you have a housing market with inflated home prices, low appraisals are likely to be more common. In some cases, they may be causing mortgage loans to fall through.

Housing Market Predictions | Real Estate Market Forecast

Not everyone has cash dedicated to renovations and repairs, but a little sweat equity can go a long way. Even if your home is outdated, a clean space gives buyers a chance to envision the house’s potential. Use a mortgage calculator to estimate your monthly housing costs based on your down payment and interest rate. At the current sales pace, inventory is at a 3.3-month supply, according to NAR. Housing supply that remains near historic lows has held up demand compared to other downturns, consequently sustaining higher home prices. Low housing inventory has been a challenge since the 2008 housing crash when the construction of new homes plummeted.

In 2006, lending criteria were significantly loosened, and little examination was done to determine whether or not a borrower could repay their loan. These days, the requirements are more stringent, which lowers the risk for both the lenders and the borrowers. Consistent with a more challenging housing market for buyers, the share of buyers that faced at least one mortgage denial before getting approved grew from 22% in 2020 to 34% in 2021. According to Freddie Mac, there are currently 18 percent more persons aged 25 to 34 than there were in 2006.

Real estate in the popular city is still appreciating year over year. But after hitting nearly $680,000 for the median home in June of this year, prices are down 8%. Palm Bay, about an hour southeast of Orlando, along Florida’s Atlantic coast, absorbed some of those newbies. The area is full of investor-owners, who were often able to purchase with cash, in all likelihood causing some of the breakneck price growth. 23% of homeowners are likely to refinance in the next six months.

Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. The good news is, home values skyrocketed over the course of the pandemic, so selling now is likely a wise financial decision. “Despite prices coming off their June peak, most homeowners stand to make large profits if they sell their home, even in today's market,” says Meyer. That’s got some holding off for now, Rosas says, waiting to see if mortgage rates rise again, or if prices will fall further. To figure out where home prices dropped the most, Realtor.com looked at the monthly median home list prices in the 100 largest metropolitan areas.

Robin, located in New York City, is also a published playwright. Her writing has been produced internationally and she worked as an operations specialist in the Broadway touring industry. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners. So, instead of waiting for much lower prices, buy a home based on your budget and needs.

In addition, as a result of the impact of growing inflation on the cost of living, they found an increase in housing payment difficulties, particularly among renters. The positive outlook is that the firm does not predict a financial or foreclosure crisis on the scale of 2008, but they do expect housing fundamentals to return to the mean. Some of that moderation will be brought about by growing salaries, while some will be brought about by declining home prices.

The Federal Funds Rate is still climbing

In 2022, the National Association of Realtors pinned mid-April as the optimal week to sell a home. But most economists believe that affordability pressure from rising mortgage rates will continue to curb demand, causing prices to fall in many markets in 2023. So if you’re poised to sell, some experts contend that now is a better time than next year. The current housing market trends indicate buyers remain interested, keeping the market somewhat competitive, especially for attractive, well-priced homes.