Unless you’re in the business, navigating the housing market can be downright confusing. These days, there are a lot of contradictory messages — near historic low interest rates, and the highest home prices we’ve ever seen — and it’s not easy to decide if now is the time to buy. Here’s what real estate pros think about the current housing market, including my take.
Interest rates will start trending upward
Collectively, real estate professionals predict interest rates will continue increasing, albeit slowly. Fannie Mae guesstimates that rates will average somewhere around 3.4% in 2022, which is a slight increase over this year. It’s still impressively low, but many experts are guessing the trend for higher rates will continue over the longer term. My take is that the powers that be will keep a low interest rate environment for likely the next decade if Europe and Japan’s monetary policies are any guide.
Demand for homes will stay high
Over the last year, home prices have risen 20% nationally and much higher in the markets I work — 40% in the general Bay Area market and much higher in the $5m+ luxury home market. Most experts, myself included, believe that trend isn’t going to reverse itself anytime soon. Experts think home prices will continue to tick upward, at a slightly slower pace one can only hope, because demand is so high and climate change is impacting a number of areas. Even if mortgage demand drops somewhat in response to economic uncertainty, demand is outstripping supply and is likely going to continue to do so, which means prices will stay high.
Given low interest rates and dizzying high home prices, you would be forgiven by wondering if now is the right time to buy. The best advice I or any expert can give you is to stop trying to time the market perfectly and focus instead on your own circumstances. If you’re currently renting, but you can forecast staying in the area for at least five to seven years, it probably makes more sense to buy and doing so can be greatly advanced by an expert helping you sort out what is a good deal and what may not be. Do your best not to get caught up in the frenzy of click bait news and get clear about what you can afford, knowing that for most people it’s going to be a stretch and some kind of compromise either in size, finish or location. Even my clients with unlimited income have to pay with their time by waiting for that special home that fits their needs, and often when we find it there’s competition. That’s where an experienced agent is truly worth their weight in gold.
If you’re looking for a home in the San Francisco Bay Area or the Lake Tahoe Reno, Nevada areas, I’m happy to help.