The 2022 real estate market in Olympia has shifted. As we go into the fall and winter months, you might be questioning if now is a good time to buy or if you should wait until next year. The two biggest issues for buyers right now in deciding if now is the time are home prices and interest rates, and where are they heading.
Where are Home Prices Heading?
Many factors come into play that affect home prices and interest rates including the job market, consumer confidence, inflation, buyer demand, and inventory levels, therefore the predictions from experts vary.
For the Olympia market, we expect home prices to be moderately higher next year than they are today based on our low inventory levels and relative affordability that is driving buyer demand. In September, the annual price gain was over 13%. It is challenging to believe this number will be a negative number overnight.
Nationally, experts are divided on the future of home prices and interest rates.
Interest Rate Predictions from the Experts
Freddie Mac predicts rates for a 30-year mortgage will go down from today’s 4th quarter average of 6.8% to 6.2% by the end of 2023. That is the most optimistic view as others are predicting rates will continue to go up next year to 8.5% to 8.75%.
Awning.com – Dennis Shirshikov, a strategist at Awning.com and a professor of economics and financing at City University of New York.
Inflation’s Affect on Mortgage Rates
Nadia Evangelou, senior economist and director of Real Estate Research for the National Association of Realtors predicts:
If inflation continues to remain high, the Fed will raise interest rates repeatedly and that’s where we could see the 8.5% interest rates. However if these repeated rate hikes curb inflation and the economy falls into a recession, then we could see rates drop to 5%. If inflation decelerates, then rates could stabilize around 7%.
Home Price Predictions from the Experts
For home prices, Freddie Mac predicts home prices nationwide will go down 0.2% in 2023.
Ivy Zelman, a prominent housing market analyzer, sees home prices dropping 4% in 2023. She forecasts inventory levels will rise quickly and demand will plummet, which would create substantial price corrections but she adds it will vary market by market.
The Home Price Expectation Survey from Pulsenomics polled over 100 industry experts and they call for 2023 home prices to increase by 2.56%.
Clearly, everyone has a different prediction for next year but what most can agree on is home prices are easing to some degree due to the surge in mortgage rates.
If you are a cash buyer, although interest rates do not affect you directly, they will affect home prices which will be most important to you. Your path to homeownership now and next year will be easier over buyers who are getting financing.
If you are a current homeowner looking to sell and buy, the very good news here is homeowners have gained significant equity over the past few years. This equity will help sellers get into their next home. On average, Olympia area sellers who owned their homes for less than two years achieved nearly $71,000 in price gains. And the sellers who owned their homes longer than 2 years on average achieved 6-digit gains.
I would also advise sellers to speak with a local, reputable lender about lending options that can take out the contingency of having to sell in order to buy. Some lenders have programs where homeowners can use their current equity to buy their next home first and then sell their current home. Not having this contingency can help when buying your next home.
Should I rent and delay buying?
Rents and home prices are both high and expensive but there are advantages to buying now.
The Home Price Expectation Survey from Pulsenomics predicts rents are expected to grow more than inflation, the stock market, and home values at an average of 5.4%. This is not good and despite a prediction in home prices flattening or decreasing, if a first-time home buyer’s rent is outpacing inflation and the stock market, this can be a challenging hurdle to affordability and to homeownership.
I’m very pro-homeownership for a multitude of reasons. Granted homeownership is not for everyone, there are many benefits if you are looking at the long-term market.
VIDEO: Should I Buy a House Now?
Unless otherwise noted, statistics compiled by Coldwell Banker Evergreen Olympic Realty and/or Francine Viola from NWMLS data. Statistics not published or compiled by NWMLS. Unless otherwise noted, statistics based on our own proprietary market study. Information and statistics derived from NWMLS.