When will the prices go down? – Forbes Advisor

House prices have continued to soar despite higher mortgage rates and an increase in housing supply, factors that generally put downward pressure on house prices. But the numbers still show that the market is quite resilient and expensive.

In June, the national median listing price for single-family homes was $450,000, up 16.9% from the same time last year and more than 31% from June 2020, according to Realtor .com. With homes approaching half a million dollars, buyers are beginning to pull out of the market. Mortgage applications fell to their lowest level at the end of June, marking the biggest drop in 22 years, according to the Mortgage Bankers Association (MBA).

The current evolution of the housing market is due in part to the economy as a whole and to consumer confidence. And right now, the economy is in quicksand – on the one hand, there are signs of a weakening economy as gross domestic product (GDP) has shrunk for two straight quarters, which, according to some economists, indicates a recession. But on the other hand, the labor market and consumer spending are still strong.

The MBA didn’t include a recession in its baseline forecast, but they say it’s a “corner flip at this point,” estimating about a 50% chance that the US will enter a recession in the next 12 coming months.

Housing Market Forecast for August 2022

Many housing insiders advise buyers against trying to time the market as the economy navigates this period of uncertainty.

“The decision to buy now or wait will depend on the motivation and situation of the individual buyer. Waiting may not be a viable option,” says Krista Forsberg, realtor at Keller Williams Realty in Edina, Minnesota. “While a buyer may push the purchase later in the year or into 2023, there is unlikely to be any meaningful improvement in prices or interest rates.”

Housing experts say they are keeping a close eye on the economy, which is being pulled in all directions by inflation, soaring gas prices, the war in Ukraine and Covid, to name a few. -ones. While housing has been the star of the US economy in recent years, there are signs of wear and tear, namely rising interest rates making it harder for buyers to access affordable housing.

“I think the sharp rise in interest rates is scaring off both buyers and sellers; they don’t know if rates will stay or continue to rise. This lack of predictability forces many buyers and sellers to sit and wait,” says Steve Simmons, founder of October Real Estate in Los Angeles. “But others will rush in for a sale or a purchase before things get worse.”

Existing home sales fell 5.4% from May to June, marking the fifth consecutive month of declining sales, according to the National Association of Realtors (NAR). However, the median sale price for these homes peaked at $416,000 in June, up 13.4% from a year ago. All of this indicates that house prices are not going down any time soon.

Will house prices continue to rise?

Inflation, high mortgage rates and record house prices are reducing housing affordability. According to a report from Zillow, a typical monthly mortgage payment is 75% higher today than it was in June 2019. And revenues aren’t keeping up with inflated costs. Wages rose 6.7% in June, less than the 9.1% rise in inflation.

MBA economists also don’t see house prices falling in the near future. They reported a median selling price of an existing home at $361,400 in the first quarter, which they expect to rise to $402,000 in the second quarter, followed by a slight stabilization at $379,000 in the third quarter.

Housing inventory forecast for 2022

Home prices could go up, but so will options, some economists say.

Realtor.com’s inventory forecast has shifted dramatically year-to-date so far, from just a 0.3% rise in inventory to its current forecast of a 15% jump. of housing stock for sale.

“As housing costs remain high, forcing homebuyers to make tough choices about their budget priorities, the number of homes for sale should continue to grow, building on the recovery that began in May,” according to the report. Realtor.com report.

“As more homeowners seek to make adjustments to accommodate their changing personal needs and take advantage of favorable market conditions to access the significant amount of equity they have likely accumulated, buyers houses will have more choices.”

Should you buy a house now or wait?

Buying a home in any market is a very personal decision. Because homes are the biggest purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before taking the plunge.

Use a mortgage calculator to find out your monthly housing costs based on your down payment and interest rate.

Trying to time the market or predict what might happen next year is not the best home buying strategy. Instead, it’s best to buy based on your budget and needs. If you find a home you like in an area you like and it also fits your budget, chances are it’s right for you. However, if you sacrifice too much just to get a house, you may end up with buyer’s remorse and an expensive albatross that you’ll have to offload.

Tips for buying in a boiling real estate market

Start with a budget and make a pact with yourself to stick to it. Even with a slight increase in the number of homes for sale, buyers are still faced with high prices and mortgage rates in the 6% range.

“There are a lot of factors that go into buying right now, and frankly, a lot of people are afraid of making a mistake,” says Jennifer Baptista, realtor at Fresh Starts Registry in Andover, Massachusetts. “As a seasoned agent, I ask my clients first and foremost, ‘What’s your gut saying?’ If the [timing] feels wrong, you will always find the wrong house, so wait.

Rachel Luna, director of Patriot Title in Houston, also advises buyers to slow down. The scarcity mentality in the market has caused people to make quick decisions, which can quickly turn into buyer’s remorse.

The problem is that you can’t return the house if you realize you’ve paid too much or just bought a place you don’t like. Seller fees can be up to 10% of the selling price of the home, so you could end up losing money if you turn around and sell it.

“Be patient,” Luna said. “What really matters when buying a home are your personal finances and long-term economic stability. Ask yourself: Are you debt-free? Do you have an emergency fund for three to six months of expenses?Will your monthly house payment be equal to or less than 25% of your monthly take home pay?If you don’t comfortably meet these qualifications, it doesn’t matter if the market is in your favor.

Tips for selling in a boiling real estate market

The first step to a successful sale is to find a listing agent who knows the area and who comes highly recommended. A good agent will work closely with you to price your home competitively while answering questions and offers from potential buyers.

In the meantime, present your home in the best possible light. Not everyone has money dedicated to renovations and repairs, but a little money can go a long way. The first step is to declutter, organize and clean.

Tidy away piles of bills and receipts, store toys, and make sure your kitchen is tidy. Bright lighting is also a great way to make your home look spacious and bright.

Even if your home is outdated, a clean space gives buyers a chance to envision the potential of the new home.