2022 Market Update

What is happening in the real estate market?

NATIONAL NEWS: Realtor.com expects home prices and mortgage rates will continue to rise, home sales will drop as buyers are priced out of homeownership, and the housing market will continue to cool. However, in a bright spot for frustrated homebuyers, the number of homes on the market is expected to shoot up.

“The number of homes for sale right now is so low that it’s creating these ultracompetitive conditions for buyers, which are so challenging,” says Realtor.com Chief Economist Danielle Hale. “More homes for sale will help bring back more balance and sanity to the market.”

Mortgage rates are now anticipated to hit 5.5% by the end of the year—a rate expected to continue sidelining buyers already grappling with record-high home prices. Initially, the Realtor.com economists predicted they would hit only 3.6% for 30-year fixed-rate loans. However, rates hit a high of 5.3% last month before settling in at around 5.1%, according to Freddie Mac data.

 
The lower projection was made before persistent inflation became a thorn in the side of the U.S. Federal Reserve. The Fed is now hellbent on taming those runaway prices by hiking interest rates—causing historically low mortgage rates to soar.
“Rising interest rates have shifted the foundation of the economy as well as the housing market. So many homebuyers take out mortgages so that rising rates affect how expensive homeownership is,” says Hale. “It’s causing buyers to make tough trade-offs and disrupting the housing market.”

The nearly 2 percentage point difference between the initial low prediction and the actual mortgage rate increase is a game changer for the housing market.

HYPER LOCAL: Request Twin Cities Updated 2022 Real Estate Market Prediction

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