There may be a slight correction in pricing.... -what buyers need to know about the housing market in 2022!

Dated: January 10 2022

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Though housing prices have been rising, mortgage rates remain near historic lows, though many experts think they will rise. And that’s leading many Americans to wonder what to do about buying a house now. So we asked pros to give you advice on what to know now if you’re thinking about buying.

Mortgage interest rates are likely to rise

We are already starting to see interest rates rise and with fears of inflation, this trend can easily continue into 2022. It remains a big question whether a rise in interest rates will bring down pricing given there is such a shortage of housing supply in the country. We shall see....

Daryl Fairweather, Redfin chief economist, says, “I expect mortgage rates to slowly rise to 3.6% by the end of 2022.” This, he says, is because the Fed is tapering mortgage backed security purchases and we’ll feel the effects in mortgage rates. Dr. Lawrence Yun, the chief economist at the National Association of Realtors (NAR), forecasts the 30-year fixed mortgage rate to increase to 3.5% by the end of 2022. Meanwhile, predicts an average mortgage rate of 3.3% throughout the year, hitting 3.6% by end of year; and Bankrate thinks rates could hit 3.75% at some point during the year. “But there will be ups and downs along the way as concerns about slower economic growth creep in,” says Greg McBride, chief financial analyst at Bankrate.

The fast ascent of housing prices will likely slow

Housing prices rose significantly in 2021 — a nearly 20% rise — and that fast pace will slow, but experts say prices, in general, are still likely to go up. The National Association of Realtors predicts housing prices will climb 5.7% in 2022, while says it’s more like a a 2.9% rise.

To be fair, some markets may actually see prices fall. The CoreLogic Market Risk Indicator, which looks at the health of housing markets across the country, predicts that Springfield, Massachusetts; Worcester, Massachusetts; and Modesto, California, for example, are at the highest risk (50-70% probability) of a decline in home prices over the next 12 months.

Don't get caught up in a Buying Frenzy!

Yes, buying has big advantages, including real estate appreciation as it averages roughly 4% a year in previous market that considered in my book "normal" and tax perks like mortgage-interest deductions. But it’s not always the right move: The rough rule of thumb is that if you don’t plan on staying in the home or area a long time (longer than say 3-5 years) than think of a purchase as an investor and look at the rate of return or cash flow.

Alsway check HOA to make sure there is no rental cap!

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Thomas Wohl

Living in the Triangle for over 25 years now, I'm excited to show my clients all the things I love about this area and why I've chosen this as my home away from home! Originally from Europe, my youth ....

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