Recently, this is the question that I get most often from my clients. At the risk of sounding too cheeky, the answer really is: it depends. However, as we approach the start of the third quarter, there are some things we know for certain.
The Federal Reserve has announced that it plans to continue to raise interest rates at least several more times before the end of the year. This will force some buyers out of the market as it raises mortgage payments but will motivate others who have been waiting in the wings to make a purchase.
Inventory is low and competition is steep. Bidding wars pushed approximately 7 out of 10 homes to sell for above the asking price in Kent County in May.
Not only have homeowners been forced to compete heavily against each other, but investors are also actively growing their portfolios. The National Association of Realtors reported in March that investors accounted for almost 30% of single-family home purchases.
The Home Price Index Forecast, put together by Case-Shiller Index, expects home prices to have risen year over year by almost 20% at the close of 2022. How is this sustainable you ask? When are prices going to crash again? Actually, many economists and real estate experts are predicting continued price increases – just at slower rates. Unlike the early 2000s, lending standards have remained high, but make no bones about it: cracks are starting to show. I’ll be taking a deeper dive into these predictions in my next post.
In May, The average price of a home in Kent County was $270,000 and stayed on the market for about 13 days.
Even with skyrocketing home values, Michigan is still one of the most affordable places in the country to own a home. The Midwest still has some of the smallest mortgage payments as a percentage of income. We hover near 15% while many other parts of the country are pushing 30%.
So what does all this mean? Here are the main takeaways you need to think through before deciding what is best for you:
- Housing inventory is still low and there are many active buyers.
- Experts are predicting continued but much slower growth in home prices moving forward.
- Interest rates are increasing, and expected to continue, so now is a great time to lock in a lower rate for your mortgage.
- Currently, it is a great time to sell your home, but you will have to work a little bit harder to find something to replace it.
- This housing market is very different from the one of the early 2000s, but that can all change in an instant.
If you’d like to talk further or have questions about your particular circumstances, don’t hesitate to reach out to me. Let me know what you think about the current real estate market in the comments. Are we headed for a crash? To the moon? Or somewhere in between? As always, thanks for trusting me to help you reach your real estate goals.