{"id":2920,"date":"2023-04-17T09:39:39","date_gmt":"2023-04-17T13:39:39","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2920"},"modified":"2024-04-25T23:17:38","modified_gmt":"2024-04-26T03:17:38","slug":"real-estate-and-mortgage-rate-roller-coaster-can-anyone-say-whats-next","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/real-estate-and-mortgage-rate-roller-coaster-can-anyone-say-whats-next\/","title":{"rendered":"Real Estate and Mortgage Rate Roller Coaster: Can Anyone Say What’s Next?"},"content":{"rendered":"\n
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In normal times, we\u2019d now enter a predictable phase of the real estate cycle: spring\u2019s brisk market. But this year, buyers are concerned about mortgage rates. Granted, rates are calming down a bit after touching 7% in March. And in some markets, property values seem to be cooling off.<\/p>\n\n\n\n

Hopeful buyers are eagerly watching. First-timers want to finally experience the joy of owning<\/a> their homes. And they want to know if the market slide has hit a bottom, or if home values could still drift downward from here.<\/p>\n\n\n\n

Oddly enough, two key forecasters \u2014 the Zillow\u00ae Group and Moody\u2019s \u2014 have contrasting outlooks on price action ahead for U.S. housing markets.<\/p>\n\n\n\n\n\n\n\n

2022 Threw the Market a Curve Ball<\/h2>\n\n\n\n

Home prices soared more than 10% in early 2022. Then, in late 2022, home prices gave up nearly half of that gain. \u201cIt\u2019s all about the Fed,\u201d some said.<\/p>\n\n\n\n

Jerome Powell<\/a>, head of the Federal Reserve, was alarmed by signs of inflation. Once inflation got up to 7%, the Fed started hiking the federal fund rate \u2014 that is, the interest rate for banks. Indirectly, that put the damper on a phenomenal seller\u2019s market.<\/p>\n\n\n\n

Mortgage rates started climbing. The median home price came down \u2014 from a peak of over $400K, to $363,000 by early 2023. The seller\u2019s market has been cooling down for a full year now.<\/p>\n\n\n\n

Still, home values are holding up well in the Midwest. Cincinnati and Chicago home values are up more than .5% year-to-date. In the northeast and throughout the south and southeastern United States, too, prices are inching up.<\/p>\n\n\n\n

Overall, let\u2019s just say it\u2019s a very pricey market out there.<\/p>\n\n\n\n

Moody\u2019s Prediction: The Market Will Keep Slowing\u2014For Years<\/h2>\n\n\n\n

The higher they went, the harder they\u2019re falling. The market\u2019s running out of steam in San Diego, San Jos\u00e9, and San Francisco, It\u2019s fizzling a bit in Seattle and Portland, and in Denver and Las Vegas. Year-to-date, markets are down more than 2% in Boise, Austin, Las Vegas, and Phoenix.<\/p>\n\n\n\n

It\u2019s not as though, after all, the buyers out there all got raises. Most people who could buy did so when borrowing was a little cheaper.<\/p>\n\n\n\n

Looking at the United States as a whole, Moody\u2019s expects a 4% dip in home prices this year, and another 4% dip in 2024. If that happens, most of the great seller\u2019s market peak will be flattened out.<\/p>\n\n\n\n

Moody’s expects 98% of major metro areas to slide \u2014 for an overall 10% drop since the real estate market peaked in June 2022. But note that in the Moody\u2019s predictions:<\/p>\n\n\n\n