It’s the hottest month of the year, not only in climate but in Real Estate as well. And with that, we believe it’s imperative that we inform you about the most recent predictions made by experts in how the housing market is going to turn out. By comparing pre-pandemic and post-pandemic levels of economic activity and factoring in the sudden boom in workspace requirements as well as a trend of remote work for some of the largest corporations in the largest cities in America, these experts have compiled a list of the top 4 trends in the housing market following May 2022.
1. High Priced Homes Become Less Desirable
With 30-year fixed mortgage rates steadily rising from 5% and going up within just this month, experts believe that the rate at which large extravagant homes are purchased will decline. Most buyers want to buy a home that isn’t priced too high but they also want to make sure that their monthly mortgage payment isn’t larger than their monthly income. This is one of the reasons why many homeowners are choosing to buy smaller homes that meet their bare necessities rather than going for that large backyard pool and tennis court.
2. Mortgages will decline
Because of high interest rates, lenders being inclined to limit their exposure to defaulters, and a 15% increase in home prices across several key real estate areas, many willing buyers will be affected as they could become unable to afford the high monthly payments that come along with rising interest rates. Despite the fact that many people will be able to afford their existing payments, new mortgages may decline because of external factors such as rising consumer prices and inflation that comes as a direct result of Covid-19.
3. Growth Rates May Decline
Don’t get us wrong, the housing market is growing at exponential rates. And several experts including those from publications such as Forbes and Fortune are right to believe that the real estate market will grow. However, there is also speculation that the rate at which the market will grow is going to slow down once things begin to simmer down following the month of May. Zillow has even predicted that home prices will continue to grow until they reach a value of 22%, following which they will steadily decline to roughly 17% by next year. This will be a direct result of the decrease in demand cause by rising interest rates, as mentioned earlier.
4. Remote Work Will Heavily Impact Housing
Many key executives and other employees are facing the decision of returning to the office or working from home. Those that are choosing to remain at home to spend time with their family are also seeing the financial and lifestyle benefits of living in suburban areas. Not only do they save money, but the air quality is better and so is the community engagement. While many companies are making it mandatory to return to the office, The Great Resignation has resulted in a large number of companies showing flexibility, and experts believe that this will greatly impact the amount of homes being bought or rented in suburban and metropolitan areas,