Loan experts forecast 6% interest rate coming to the US housing market in 2022. Currently rates have risen to about 4.75%. We have witnessed the fastest rise in mortgage rates in US history the past 4 weeks.
Mortgage rates skyrocketed 24% in the past four weeks, and they are not done yet. We have been warning readers that rate hikes were coming. It is not too late to make a move, but those that begin the process now will benefit over those that wait.
Save Money by Buying Now
Buyers are better off buying now. Even if a buyer believes home prices will fall, mathematically they are still better off buying now at lower rates than waiting.
Home sellers are better off acting now because rising rates dampens buyer enthusiasm, not to mention the amount they can afford to pay for a home. The real question is, how will rising rates affect homebuyers up North flocking to Florida but needing to sell their home first? This is where we could see an impact. Many of these buyers turn into cash buyers, but if they face a difficult time selling their home up North, it could affect us here in SW Florida.
There is no question people still want to move here. The question is, how much can they afford when they get here, or can they get here? Many locals have tapped out because prices have risen so much and priced them out of the market. Rising rates have already lowered the price point they can afford, so it cuts into demand.
Builders are losing contracts from buyers who no longer qualify for the mortgage since the construction contract was signed. The good news is there are still buyers out there willing to scoop the property up. Builders appreciate the fact they are losing buyers because many of those deals were signed at year ago prices. The builder can now sell to a different buyer at today’s prices.
Rates Affect Affordability
Just the same, rising rates are limiting how much buyers can pay for homes, and when enough buyers are affected, it will affect the overall market. With forecast 6% interest rate coming soon to our market we are watching its effect on home prices.
The other thing we are watching is inventory levels. Daily levels are rising a bit. Overall housing inventory levels are very low in Southwest Florida. It is still a good time to be a seller, but the future becomes a little less settled later in the year.
Most economists are predicting a recession later this year or next. The yield curve has inverted which signals an upcoming recession. See our article on February 10th at https://blog.topagent.com to read up on how that metric has predicted every recession since the fed began publishing it in 1976.
Rising Rates Will Cost More Than Benefit of Falling Prices
Prices may continue to rise. They could fall back a bit. Nobody knows exactly where prices will go except that we don’t anticipate large swings one way or the other. What we do anticipate are rising rates, and that will not be fun for buyers or sellers. Our team has experience working in up, down, and sideways markets so we will be with you every step of the way with best guidance. Many Realtors have only worked in one cycle and don’t know what to do if the cycle changes.
I remember back in 2005 when I went on TV and told everyone the market was about to change. Many Realtors told me I was crazy and didn’t understand the market we were in. I am not calling for a change like we saw back in 2006. I am saying things are about to change. It will not be as fun for a seller as the last 2 years have been, but goals can be accomplished, and we’ll have to work a little harder to find buyers and keep deals together.
If you have questions about the market, call Brett or Sande Ellis 239-310-6500 or visit www.SWFLHomevalues.com to see the value of your home instantly.
Good luck and happy selling!