What You Can Expect from the Spring Housing Market

As the spring housing market kicks off, you likely want to know what you can expect this season when it comes to buying or selling a home.  The housing market seems to be relatively immune, while there are several factors causing some uncertainty, including the  rising inflation, conflict overseas, and the first rate increase from the Federal Reserve in over three years. 

Take a look at what experts say you can expect this spring.

1. Mortgage Rates Will Climb

The 30-year fixed mortgage rate has increased by more than a full point in the past six months as per Freddie Mac report. In recent weeks despite of some mild fluctuation, experts believe rates will continue to edge up over the next 90 days.

If you’re a first-time buyer or a seller thinking of moving to a home that better suits your needs, realize that waiting will likely cost  you and pay a higher mortgage rate on your purchase. The higher rate drives up your monthly payment and can really add up over the life of your loan.

2. Housing Inventory Will Increase

In eight months, as announced by National Association of Realtors (NAR), the month's supply of inventory increased for the first time. It was recently reported by Realtor.com that the number of newly listed has grown for each of the last two months. The inventory of existing homes usually grows every spring, and it seems, based on recent activity, the next 90 days could bring more listings to the market.

If you’re a buyer who has been frustrated with the limited supply of homes available for sale, it looks like you could find some relief this spring. However, be prepared to act quickly if you find the right home.

If you’re a seller, listing now instead of waiting for this additional competition to hit the market makes sense. Your leverage in any negotiation during the sale will be impacted as additional homes come to market.

3. Home Prices Will Rise

Prices are always determined by supply and demand. Though the number of homes entering the market is increasing,  buyer demand remains very strong.

What does that mean for you? With the demand for housing still outpacing supply, home prices will continue to appreciate. Many experts believe the level of appreciation will decelerate from the high double-digit levels we’ve seen over the last two years. That means prices will continue to climb, just at a more moderate pace. Most experts are predicting home prices will not depreciate.

Won’t Increasing Mortgage Rates Cause Home Prices To Fall?

While some people may believe a 1% increase in mortgage rates will impact demand so dramatically that home prices will have to fall.

As the chart shows, mortgage rates jumped by at least 1% six times in the last thirty years. In each case, home values increased.

So again, if you’re a first-time buyer or a repeat buyer, waiting to buy likely means you’ll pay more for a home later in the year (as compared to its current value).

If you’re thinking of buying, act now before mortgage rates and home prices increase further. If you’re thinking of selling, your best bet may be to sell soon so you can beat the increase in competition that’s about to come to market.

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