Two articles from Fortune
Where home prices are headed through 2023, as forecast by Bank of America
March 16, 2022 2:43 AM MST
Federal Reserve Chair Jerome Powell told Congress earlier this month he favors upping rates in order to help rein in runaway inflation. In preparation of the first hike, which is expected today, financial markets are already pricing in higher mortgage rates. As of Friday, the average 30-year fixed mortgage rate sits at 3.85%—up from 3.11% in December.
Spiking mortgage rates should help to cool the red-hot housing market, right? Not so fast, predicts a report due out this week by Bank of America.
While higher mortgage rates would price out some buyers, Bank of America says it won't be enough to stop the housing market from posting strong home price growth this year. Indeed, Bank of America predicts that U.S. home prices will finish 2022 up 10%. That's nearly double the average annual home price growth (4.6%) posted since 1989. However, it would be a bit of a deceleration: Between December 2020 and December 2021, the Case-Shiller U.S. National Home Price Index—the leading measurement of U.S. home prices—jumped 18.8%.
Why the bullish 2022 outlook? While climbing mortgage rates could pour some cold water on the housing market over the long term, Bank of America says it could increase buyers’ urgency—as they rush to lock in rates—in the short term. Rising household incomes, favorable demographics, and "shifting preferences due to remote work" should also put upward pressure on price growth, writes Bank of America. That demand is something the supply side of the market—which is still hovering around four-decade lows for housing inventory—simply can't handle.
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also from Fortune
Falling home prices? It’s only likely in these 13 housing markets, says CoreLogic
The housing market isn't just running hot—it's running red-hot. The inventory crisis, which has seen homebuyers outnumber sellers by a wide margin during the pandemic, is worsening. Bidding wars are up to a new all-time high, and every single major forecast model shows home prices rising nationally this year.
That said, there are a few regional housing markets that could buck the national trend and actually post declining home values this year. That's according to an analysis released this week by CoreLogic, a real estate research firm ranked No. 952 in the Fortune 1000.
On Wednesday, CoreLogic provided Fortune the market risk calculation for 385 metropolitan statistical areas. Among those markets, CoreLogic rates 13 markets as having a "high" likelihood (between a 50% to 75% probability) of declining home prices in the coming 12 months. Those 13 markets include Niles, Mich.; Lake Havasu City, Ariz.; Chico, Calif.; Lewiston, Maine; Modesto, Calif.; Muskegon, Mich.; Pittsfield, Mass.; Prescott, Ariz.; Worcester, Mass.; Bend, Ore.; Kalamazoo, Mich.; Merced, Calif.; and Springfield, Mass.
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Me, I don't predict the future.
I simply report on what happened in this market in the past and what is happening in the present. If you wish to, use the information I post here as you see fit to help you gauge what is going to happen in the future.
That said, at this time there are no signs of a slowdown in this market. It is not loosening up, the inventory is not increasing. If anything the market is running tighter, with more buyers who may have lost out on a house before and are now more determined and better prepared to enter the fray. They, the better prepared, are putting desirable homes in contract lickety-split, often in the midst of multiple offers and often at list or over list prices. That is the not-so-new normal of what's happening in this market now.
Take care, stay well
John Schneider /Realtor®
Tierra Antigua Realty
johnschneiders@gmail.com
520 271-4164
see my website TheFoothillsToday.com
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