Despite hopes that rising mortgage rates will cool the competitive real estate market, housing supply and listing prices, it may not return to pre-pandemic levels any time soon.
Real estate experts polled for the latest Zillow Housing Price Expectations (ZPHE) survey believe housing inventory will not return to a monthly average of at least 1.5 million available units before the end of 2024. Economists also agree that house price appreciation will slow but continue to grow over the next few years.
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“We are seeing new listings coming back into the market, slowly, as we enter the hottest selling season of the year, but this supply gap is going to take a long time to fill,” the economist said. Zillow Principal Jeff Tucker.
Keep reading to learn more about Zillow’s latest housing market predictions. And if you’re thinking of buying a home or refinancing your mortgage this year, you can visit Credible to compare interest rates for free without affecting your credit score.
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Home price appreciation rates may slow, but annual increases will remain high
Home price appreciation was 19% in 2021 due to limited supply coupled with strong demand from home buyers looking to take advantage of low mortgage rates. And while soaring interest rates may cause demand to slow, experts polled by Zillow still expect median prices to continue to climb 9% in 2022 as stocks struggle to rebound.
On average, survey respondents expect home prices to rise 26.8% over the next five years. The most optimistic respondents expect house prices to rise by 46.5% by the end of 2026, while conservative estimates call for a rate of appreciation of 10.3% during this period.
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While it may seem daunting to first-time buyers, this sound forecast of long-term growth offers a ray of hope for those motivated enough to purchase a home in today’s competitive market.
“Inventory rates and mortgage rates will determine how much and how fast home prices rise this year and beyond,” Tucker said.
If you’re considering buying a home when mortgage rates are rising slightly, it’s important to compare multiple lenders. You can compare mortgage rates on Credible to find the lowest possible rate for your financial situation.
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Current owners could benefit from higher equity in their property
Homebuyers aren’t the only consumers who should take note of skyrocketing home values. Current homeowners can consider taking advantage of their record home equity with a cash mortgage refinance.
Cash-out refinancing involves taking out a larger mortgage than you currently owe, pocketing the difference in cash. This can allow homeowners to pay off high-interest debt or finance home renovations at a lower interest rate than an unsecured personal loan.
It is important to note that refinancing a home loan comes with closing costs, usually between 2% and 5% of the total loan amount. Plus, you’ll want to make sure you’re still able to get a competitive mortgage rate with what you’re currently paying.
Although mortgage interest rates are on the rise, some homeowners could still benefit from refinancing. You can check the current mortgage rates in the table below to decide if refinancing is worth it. Plus, you can connect with a knowledgeable lending expert at Credible to determine if mortgage refinancing is the right financial strategy for you.
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