{"id":2244,"date":"2022-05-27T11:00:00","date_gmt":"2022-05-27T15:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2244"},"modified":"2024-04-25T23:18:44","modified_gmt":"2024-04-26T03:18:44","slug":"real-estate-market-predictions-the-next-five-years","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/real-estate-market-predictions-the-next-five-years\/","title":{"rendered":"Real Estate Market Predictions: The Next Five Years"},"content":{"rendered":"\n
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What is going on? Property values might level off, but the mortgage rate is the latest thing to soar. The typical rate is up by 2% over December 2021. So the hopeful home buyer continues to face difficult decisions.<\/p>\n\n\n\n

Many people are wondering how long it will take for a normal market to return. Here\u2019s what we can tell now.<\/p>\n\n\n\n\n\n\n\n

So, the Home Buying Frenzy Is Finally Showing Signs of Slowing?<\/h2>\n\n\n\n

At some point, it has to<\/em> slow down. Those 15% and even 20% annual rises in home values we\u2019ve recently witnessed? They have created the longest property value surge we\u2019ve ever seen. This market dynamic is just not sustainable.<\/p>\n\n\n\n

And mortgage rates are quickly rising, making homes of all price categories much costlier to own in 2022 than they were just a year before. Home buyers in March 2022 could have locked in a 4% interest rate on their home loans. By the end of April, rates were above 5%.<\/p>\n\n\n\n

Higher mortgage rates put brakes on the real estate market. With rates climbing, people will lose the stomach for bidding wars.  <\/p>\n\n\n\n

In light of the sudden rise in interest rates in 2022, Zillow thinks the market will go from red-hot to simply hot, and that prices will still rise more than 11% year-over-year heading into 2023. In fact, the company predicts that the market won\u2019t return to a normal rate of price inflation (which is somewhere around 5%) until 2024.<\/p>\n\n\n\n

But CoreLogic\u00ae researchers think we\u2019re already downshifting into a normal rate of growth in the market. The CoreLogic HPI Forecast predicted a median home price increase of 5.9% from March 2022 to March 2023. And the possibility of a recession<\/a> is another factor to watch, because it means fewer people will prepare to make large purchases. During recessions, people need to think carefully about the stability of their sources of income. And when vetting mortgage applications, lenders will be taking a hard look, too.<\/p>\n\n\n\n

A Crash? Unlikely.  <\/h2>\n\n\n\n

Millennials and younger people are still out there, trying to buy. Lots of them. There aren\u2019t enough homes to go around.<\/p>\n\n\n\n

People are not rushing to sell at this time. Many are unwilling or unprepared to sell if it means they\u2019ll have to buy again in this competitive real estate market. Not only are property values sky-high. Mortgage rates may be higher than what many now have on their current loans.<\/p>\n\n\n\n

This imbalance will take more than five years to smooth out. This makes a market crash highly unlikely.<\/p>\n\n\n\n

We\u2019re not likely to witness a flood of foreclosures, either. Lenders\u2019 vetting criteria are just too strict, and that means today\u2019s mortgage holders are financially stronger, and better poised to weather an economic downturn than they were in 2007, before the infamous housing bubble burst.<\/p>\n\n\n\n

Since 2020, homeowners have accrued significant equity in their properties. Their current home valuations will help them weather a downturn in the market.<\/p>\n\n\n\n

On top of this, lenders are cautious, and they\u2019re refusing to issue home equity loans that leave people at high risk. All of this should keep the housing market relatively safe over the next five-year period.<\/p>\n\n\n\n

Staying Out for Now? Or Jumping In? Here Are Some Key Considerations.<\/h2>\n\n\n\n
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Here are the main features we see in the current market:<\/p>\n\n\n\n