Kelley Blacken- Realtor, United Country Gull Lake Realty & Michigan Lifestyle Properties
Kelley is a native of Southwest Michigan. She graduated from Western Michigan University obtaining a Bachelor of Science Degree. After graduation she began working in the multi-family rental industry as assistant manager for a 55+ apartment community. She owned & operated The Condominium & Apartment Guide for nearly 25 years and was instrumental in making it the go to source for rental housing information in the greater Kalamazoo & Battle Creek area.
She has been an active Realtor with Gull Lake Realty since 2005 and enjoys working with buyers and sellers alike helping navigate them through the process. While Kelley enjoys working with all types of lifestyle properties her expertise is in waterfront, log and country homes. She enjoys showing out of state people all the great things to do & see in Southwest Michigan.
Kelley currently lives in the Delton community with her husband. She has 3 grown children. When not selling Lifestyle Properties you will find Kelley at the gym, volunteering at her church, working in her flower or vegetable gardens or on the Pickleball Court.
Will Housing Prices Ever Stop Rising?
Ask people about how real estate was affected by the COVID-19 pandemic, & they tend to give the same answer: buying a house got way more expensive. Now, after nearly two years of soaring prices, buyers, sellers, & agents all may be wondering whether the price of homes will ever drop or even level off.
There are signs that the market is cooling, but also broad economic trends indicating that the price of homes, along with the price of everything else, isn't likely to plunge anytime soon.
Here, we take a look at some of the factors affecting housing prices.
Why Are Homes So Expensive?
It's natural for buyers to wonder: Why have home prices risen sharply over the past two years?
In short, the answer is classic supply & demand. Demand for buying was turbocharged by lower mortgage rates that incentivized buyers to borrow & COVID-related changes to how we live & work that left people yearning for more space. Supply was constrained by a slowdown that made it hard for home builders to get the materials necessary to build new homes. This glut of eager homebuyers & a limited supply of homes led to the hottest housing market on record, with the average American home price increasing by 25% since March 2020. Add in burgeoning iBuying technology & the trend of real estate investors snapping up homes, & it's no wonder that many would-be first-time home buyers have found themselves priced out of the market. Conversely, high prices have been a boon to home sellers, who have been able to sell their homes quickly & often above the original listing price.
What Factors Will Affect Home Prices in 2022?
Clearly, the high price of homes affects buyers & sellers. This year, keep an eye on these three market factors.
1. Mortgage rates
Ultralow mortgage interest rates fueled much of the recent housing boom. For people who kept their jobs throughout the pandemic & saved money, low interest rates meant low borrowing costs, which helped drive up the price of homes. These ultralow rates appear to be coming to an end. The average rate for a 30-year fixed-rate loan is now 3.22%, up from a year ago, when the rate was at 2.65%. Plus, the Federal Reserve plans to raise short-term interest rates this year, which will likely cause mortgage rates to rise further. In January 2020, the average mortgage rate was 3.7%, & the National Association of Realtors expects that rate to return by the end of 2022. While that rate is unlikely to crater the housing market, it would likely result in a slower rise in home prices. Overall, keep an eye on mortgage rates. If the 30-year fixed mortgage rate approaches 4%, it's a sign that the market is cooling, & that home prices are likely to stabilize.
If you've shopped for groceries or tried to buy a car, it's been obvious: things are getting more expensive.
In 2021, the U.S. inflation rate rose the fastest it has in 40 years, to 6.8%. Whether inflation is likely to be temporary or persistent is unclear, but if history serves as a guide, inflation will affect the price of homes & the real estate strategies of buyers and sellers.Traditionally, real estate has been a "safe haven" for investors, because home prices rise relative to the size of the economy. When inflation surges, homeowners are in a stronger position because the cost of homes rises alongside everything else.
For home buyers, especially first-time buyers, high inflation is bad news because it's more expensive to buy a home and harder to save for a down payment. The opposite is true for sellers, who can jack up their asking price & still receive offers. If inflation rises, expect higher home prices. If, as some economists predict, inflation falls, the price of homes is less likely to rise, making for a more buyer-friendly market.
3. New home construction
Among the most influential accelerants of home prices in 2020 & 2021 was a dearth of available homes. During the past two years, home building suffered alongside many other industries, as pandemic-induced manufacturing shutdowns & slowdowns made it hard for builders to get the materials necessary to build a home. Those issues haven't entirely gone away, but new housing permits & construction starts have recently risen above pre-pandemic levels. If new home construction skyrockets, the price of homes will likely be held in check. If there is minimal new construction & development, expect more buyers than available homes, & a rise in prices.
Overall, signs point to home prices that will continue to rise in 2022, but not as rapidly as in the two preceding years. But indications are only that. If you have any questions don't hesitate to reach out to me
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