October 2022 Market Update
In this October 2022 housing market update, we'll dive into the current state of mortgage rates, explore the dynamics affecting home values, and discuss what lies ahead for home prices. The housing market has experienced significant fluctuations in recent times, and understanding these trends can be crucial for both buyers and sellers. So, let's delve into the details.
Will Mortgage Rates Continue To Rise? Over the past six weeks leading up to September 29th, mortgage rates have been on the rise. In fact, rates have more than doubled compared to the previous year, largely influenced by uncertainty and volatility in the financial market. According to George Ratiu, Senior Economist of realtor.com, we can expect rates to reach the 7% range within the next three months, or perhaps even sooner.
What's Going On With Home Prices? On a national level, the supply and demand ratio in the housing market has undergone significant changes over the past year. Active listings have increased by approximately 27% year-over-year (YOY), while showings have decreased by 12.2% YOY, indicating a shifting landscape. However, if we focus on the local Richmond Metro area, the situation is quite different. New listings have decreased by 29.6%, and inventory of homes is down by 19.1%. With only 0.9 months of supply inventory (MSI), Richmond remains a robust sellers market. In fact, Richmond ranked 17th in year-over-year appreciation in September, with an impressive 12.5% increase in home values, according to Zillow.
What's Ahead For Home Prices? While predicting home prices with certainty is challenging, industry experts have provided their insights. The six major forecasters for 2023 anticipate an average increase of 1.8% in home prices (Graphic 6). However, it's worth noting that Ivy Zelman's forecast stands out, as she predicts a depreciation of -4% for 2023. Looking further ahead, a large percentage of forecasters are calling for appreciation in the coming years, with 96.8% of forecasts indicating positive growth through 2026 (Graphic 8).
Tips For Sellers:
- Compelling Is Still Selling: To stand out in the market, sellers should focus on presenting their homes in an attractive and compelling manner.
- Richmond Is Historically Seasonal: Understanding seasonal patterns in the Richmond housing market can help sellers strategize their listing and marketing efforts accordingly.
- Never Too Early To Start Planning: Sellers should start planning well in advance, considering factors such as staging, repairs, and pricing strategies.
Tips For Buyers:
- Homeownership Is A Long-Term Play: Buyers should approach home buying as a long-term investment and carefully consider their financial goals and future plans.
- The Interest On Rent Is 100%: Rent payments do not build equity, whereas mortgage payments contribute to homeownership and wealth accumulation.
- Consider a Rate Buy-Down: Buyers can explore the option of a rate buy-down to secure a lower interest rate and potentially save on monthly mortgage payments.
Conclusion: The October 2022 Housing Market Update sheds light on the current state of mortgage rates, home values, and future price trends. While mortgage rates have been rising steadily, the housing market in Richmond remains favorable for sellers. Home prices are expected to appreciate, with forecasters predicting positive growth in the coming years. For both sellers and buyers, understanding the market dynamics and considering expert advice can be valuable when navigating the real estate landscape.