Norada Real Estate Investments

Mortgage Rates Next 90 Days: Will Rates Decline?

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Mortgage Rates Next 90 Days

In this article, we'll explore the latest predictions for mortgage rates over the next 90 days and what it means for those looking to buy or refinance a home. For prospective homebuyers and current homeowners, keeping a close eye on mortgage rates is crucial in determining when to make a move in the housing market.

The Federal Reserve's recent shift in expectations for short-term interest rates has stirred the markets. The pause in interest rate hikes in June was expected but appeared to be short-lived. Fed members projected further monetary policy changes for the rest of 2023, indicating at least one rate hike and the possibility of more in the near future.

The market response included recalibration of positions, pushing interest rates higher despite signs of cooling inflation and slightly looser labor conditions.

Mortgage Rates Forecast for Next 90 Days

According to Hsh.com, their recent forecast didn't align accurately with market developments. Fixed mortgage rates, initially stable, took an unexpected turn following the Fed's May meeting. Their late May forecast missed the mark, anticipating a range of interest rates that did not align with the subsequent market shifts. This deviation was observed in both conforming 30-year fixed-rate mortgages and hybrid 5/1 ARMs, highlighting the volatility in the market during that period.

Forecast Discussion

Anticipating the Fed's upcoming policy decisions is becoming more challenging. With an extended gap between the July and September meetings, there is a plethora of economic data to consider before the next policy move. Key indicators include employment reports, CPI data, PCE prices, and GDP growth. Inflation has shown signs of deceleration, while the economy maintains a modest growth rate.

The labor market is slightly looser, with a decline in job openings, but wage growth remains a concern. The Fed aims to strike a balance between policy effectiveness and preventing financial market conditions from loosening excessively.

Forecast

Considering the potential for another rate hike in the coming months, mortgage rates may not see significant declines until there is more clarity in the forward path of the Fed's policies. The uncertainty will persist until the release of the next Summary of Economic Projections, which is expected to bring more clarity. Depending on the inflation trajectory, mortgage rates may either decline or rise. The upcoming September Fed meeting could serve as a turning point for interest rates, impacting the direction they take for the remainder of the year.

In 2022, rampant inflation prompted the Federal Reserve to take action, resulting in significant interest rate increases. The average 30-year fixed-rate mortgage more than doubled during that year. However, as inflation gradually cools, the Fed's approach to rate hikes is adjusting, and experts predict mortgage interest rates will stabilize within a tighter range compared to the spikes observed in early 2022.

While rates may fluctuate in any given week or due to global events causing economic uncertainty, projections suggest a more moderate trajectory in the coming months.

As of September 21, the 30-year fixed-rate mortgage averaged 7.19%, according to Freddie Mac. Various housing authorities anticipate that the average for the third quarter of 2023 will fall below this figure. The National Association of Realtors predicts the average 30-year fixed interest rate to settle at 6.5% for Q3, while Wells Fargo provides the highest forecast of 7.05%.

It's important to note that mortgage rates recently increased after two consecutive weeks of drops. The average 30-year fixed rate edged up from 7.18% on September 14 to 7.19% on September 21. Similarly, the average 15-year fixed mortgage rate rose from 6.51% to 6.54% during the same period.

The final thoughts are that as we approach the fall, the mortgage rate forecast remains subject to the Fed's evolving policy decisions and economic data. Investors and the market at large will closely analyze economic indicators to anticipate interest rate movements. The September Fed meeting is anticipated to be a critical event that may set the tone for interest rates in the coming months. Stay tuned for updates and insights as we monitor this dynamic financial landscape.

Mortgage Rates Predictions for Year End 2023

The National Association of Realtors (NAR) senior economist and director of forecasting, Nadia Evangelou, predicted that if inflation continues to slow down, mortgage rates may stabilize below 6% in 2023. The Mortgage Bankers Association (MBA) expects that 30-year mortgage rates will end in 2023 at 5.2%.

On the other hand, Freddie Mac forecasts that the average 30-year mortgage will start at 6.6% in Q1 2023 and end at 6.2% in Q4 2023. Therefore, housing market stakeholders are keeping a watchful eye on the data-dependent Fed for signals on whether policymakers will maintain or cut the benchmark rate or resume more aggressive tightening measures.

What's the best strategy for prospective homebuyers in this uncertain economic climate? “Be prepared to jump on a dip in rates,” says Robert Frick, the corporate economist at Navy Federal Credit Union. “But only if you have a property in mind that fits your budget.”

According to Compass U.S. region president, Neda Navab, there have been signals that mortgage interest rates may be at or near their peak, given recent encouraging news around inflation and a corresponding drop in the U.S. Treasury yields that help set mortgage rates.

A sustained drop could push mortgage rates into the 5% range late in the second quarter or in the second half of 2023, but that's definitely not guaranteed. Mortgage rates are likely to move in the 6% to 7% range over the next few weeks, which continues to pose a significant challenge to affordability, according to Realtor.com economist, Jiayi Xu.

The fight over raising the debt ceiling is likely to drag into the summer, and mortgage borrowers should expect rate volatility as a result, warns Zillow Home Loans senior macroeconomist, Orphe Divounguy. This rate volatility could mean that prospective homebuyers should not wait for mortgage rates to decrease further, as they may start increasing again soon.

To sum up, it is anticipated that the mortgage rates in the upcoming 90 days will fluctuate, with marginal rises or drops contingent upon the Federal Reserve's efforts to curb inflation. Those intending to buy or refinance a home should remain alert for any favorable changes in the rates, provided they have a property in sight that meets their financial plan. Additionally, they should keep a close tab on the data-based actions of the Fed to gauge whether they will retain or diminish the benchmark rate or adopt more forceful measures to tighten the market.

Home loan rates are being influenced by high inflation and the Federal Reserve's actions to restrain it, leading to fluctuating rates. The best strategy for prospective homebuyers is to be prepared to jump on a dip in rates, but only if they have a property in mind that fits their budget. Experts predict that mortgage rates may stabilize below 6% in 2023, but Freddie Mac forecasts rates to end at 6.2%.

With the fight over raising the debt ceiling likely to drag into the summer, borrowers should expect rate volatility. Prospective homebuyers should remain vigilant for any favorable changes in the rates but shouldn't wait for rates to decrease further, as they may start increasing again soon.

A Few References:

  • https://www.noradarealestate.com/blog/mortgage-interest-rates-forecast/
  • https://www.noradarealestate.com/blog/mortgage-rate-predictions-next-week/
  • https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/
  • https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
  • https://www.hsh.com/2month4cast.html

Mortgage Rate Predictions Next Week & Month [2023]

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Mortgage Rate Predictions Next Week

Mortgage rates have a significant impact on the real estate market, affecting both buyers and sellers. Even a small shift in interest rates can significantly affect the affordability of homes, monthly payments, and the overall demand for properties. Therefore, it is essential to keep an eye on mortgage rate trends and predictions to make informed decisions. In this blog post will analyze mortgage rate predictions for next week and what it means for buyers and sellers.

What Are the Mortgage Rate Predictions for Next Week?

If you're planning to buy a home or refinance your mortgage, staying informed about mortgage rate trends is essential. Let's take a closer look at the expert poll conducted by Bankrate for the week of September 21-27, 2023. The recent Federal Reserve meeting has concluded, and it's expected to influence the movement of mortgage rates in the upcoming week.

Expert Rate Predictions

The predictions from various experts indicate the following trends:

  • Go up: 40%
  • Stay the same: 47%
  • Go down: 13%

These percentages give us an insight into the general consensus among experts regarding the direction of mortgage rates.

Analysis of Expert Opinions

The majority of polled experts, constituting 55%, anticipate that mortgage rates will rise in the coming weeks. This is influenced by the recent Federal Reserve meeting. The average 30-year fixed rate slightly increased to 7.42 percent as of September 20, 2023, from the previous week's 7.41 percent, based on Bankrate’s national survey of large lenders.

Experts emphasize that until inflation subsides to the Fed’s target range of 2 to 2.5 percent, a significant reduction in mortgage rates isn't expected. The Fed's long-term outlook, as indicated by the dot plot, shows an expectation of rates remaining higher for a longer duration, putting upward pressure on rates.

Some experts, like Melissa Cohn, Regional Vice President at William Raveis Mortgage, believe rates will fluctuate in the upcoming week, leaning towards an increase. However, there's hope for a decline in mortgage rates once the last anticipated rate hike is behind us, leading to a meaningful reduction.

Contrasting Views

Not all experts are aligned on the rate increase. For instance, Heather Devoto, Vice President and Branch Manager at First Home Mortgage, predicts a decline in rates. This dissenting opinion is based on economic commentary from Fed Chair Powell, suggesting potential variations in expert predictions.

Ken H. Johnson, a real estate economist at Florida Atlantic University, focuses on the influence of Ten-Year Treasury yields. If these yields remain steady, mortgage rates are likely to remain unchanged in the following week.

Final Thoughts

As the week unfolds, keeping an eye on economic indicators and the decisions of the Federal Reserve will be crucial for those navigating the real estate and financial landscape. Mortgage rates are poised to fluctuate, but the general sentiment points to a potential rise. It's essential for individuals and businesses to stay informed and agile in response to these changing financial dynamics.

What Do These Mortgage Rate Predictions Mean for Buyers and Sellers?

With the anticipated trends in mortgage rates for the upcoming week, both buyers and sellers in the real estate market need to consider the potential impact on their transactions and decisions.

Buyers

1. Timing is crucial: For buyers planning to secure a mortgage, the predicted rise in mortgage rates suggests that acting sooner rather than later could be advantageous. Locking in a rate now might result in lower overall borrowing costs.

2. Budget considerations: Higher mortgage rates mean higher monthly payments. Buyers should revisit their budgets and financial plans to ensure they can comfortably afford a home with the anticipated rate increase.

3. Explore pre-approval options: With the potential for rates to go up, getting pre-approved for a mortgage now could provide buyers with a competitive edge. It shows sellers that they are serious and financially capable of completing the transaction.

Sellers

1. Market your property effectively: Sellers should highlight the current lower rates to entice potential buyers. Emphasizing the advantage of locking in a lower rate before the anticipated increase could stimulate interest and offers.

2. Be flexible and open to negotiations: As rates climb, some buyers may be more cautious or need to revise their offers to accommodate the higher rates. Being open to negotiation can facilitate a successful sale in a changing rate environment.

3. Monitor local market dynamics: Stay informed about how mortgage rate predictions are affecting buyer demand and behavior in your specific market. Local variations in rate trends may require adjusting your selling strategy accordingly.

For both buyers and sellers, staying informed and adapting to changing mortgage rate trends is essential. The potential rise in rates can impact affordability and decision-making in the real estate market. Buyers should act thoughtfully and efficiently, while sellers should position their properties strategically to navigate these evolving financial landscapes.

Mortgage Rate Predictions for the Next Month?

As homebuyers and homeowners continue to watch the real estate market, a key factor that they are also paying attention to is mortgage rates. The cost of borrowing affects affordability, and can therefore influence both demand and supply in the housing market. The past few years have seen a lot of fluctuations in mortgage rates, and many potential buyers are looking for guidance about what to expect.

As the real estate market progresses into October 2023, the trajectory of mortgage rates is a critical factor for both buyers and sellers. The trends observed in the previous months provide insights into what might unfold in the coming weeks.

Overview of Recent Rate Trends

Mortgage rates have shown notable fluctuations in 2023, experiencing an upward trend in the latter half of the year. From a low of 6.09% on February 2, rates climbed to 7.23% on August 24, as reported by Freddie Mac. This range can be attributed to the Federal Reserve's efforts to combat inflation amidst uncertainties in the banking sector, including the Silicon Valley Bank’s collapse and the fallout from U.S. debt ceiling talks.

The Fed's ongoing fight against inflation, combined with the economic impact of these events, has led to the possibility of further rate hikes aimed at bringing interest rates down.

Expert Predictions for October

Experts from various reputable institutions have provided insights into their predictions for mortgage rates in October:

  • Ralph DiBugnara, President at Home Qualified: Predicts rates will moderate, holding around 7.375% for a 30-year fixed and 6.875% for a 15-year fixed.
  • Danielle Hale, Chief Economist at Realtor.com: Anticipates rates will drop as the economy approaches an inflection point.
  • Jess Kennedy, Co-founder and COO at Beeline: Foresees rates to moderate, possibly starting a downward trend with an anticipated Fed pause.
  • Odeta Kushi, Deputy Chief Economist at First American: Expects rates to moderate, cautioning that a sustained decline might not occur until inflation reaches the Fed's 2% target.
  • Rick Sharga, President and CEO at CJ Patrick Company: Believes rates will moderate, staying in the 7.0-7.5% range for October.

These insights provide a range of opinions, suggesting that while some anticipate moderation, others foresee potential decreases in mortgage rates.

Mortgage Rate Outlook for 2023

Looking ahead to the broader scope of 2023, the consensus among major housing authorities is that the average 30-year fixed interest rates will finish below the current levels. Projections range from the National Association of Realtors' prediction of 6.5% to Wells Fargo's highest forecast of 7.05%, with an average prediction of 6.79% for Q3.

Housing Authority 30-Year Mortgage Rate Forecast (Q3 2023)
National Association of Realtors 6.50%
Fannie Mae 6.80%
Mortgage Bankers Association 6.80%
National Association of Home Builders 6.80%
Wells Fargo 7.05%
Average Prediction 6.79%

Current Rate Trends and Considerations

Presently, mortgage rates have experienced a slight increase after consecutive weeks of drops. The average 30-year fixed rate edged up from 7.18% on September 14 to 7.19% on September 21, 2023. Despite these fluctuations, rates are still below historical averages, providing potential buyers with reasonable opportunities for securing a mortgage.

It's important to monitor these trends closely, as rates could rise or stabilize depending on various economic factors and events both globally and domestically.

Month Average 30-Year Fixed Rate
August 2022 5.22%
September 2022 6.11%
October 2022 6.90%
November 2022 6.81%
December 2022 6.36%
January 2023 6.27%
February 2023 6.26%
March 2023 6.54%
April 2023 6.34%
May 2023 6.43%
June 2023 6.71%
July 2023 6.84%
August 2023 7.07%

Source: Freddie Mac

Conclusion

The mortgage rate predictions for October and the broader outlook for 2023 suggest a nuanced landscape. Buyers and sellers in the real estate market should stay informed about these predictions and be agile in adapting their strategies accordingly. As economic conditions evolve, decisions related to mortgages and property transactions should be made with a keen eye on the changing financial dynamics.

Sources:

  • https://www.bankrate.com/mortgages/rate-trends/
  • https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
  • http://www.freddiemac.com/research/datasets/refinance-stats/index.page
  • https://www.blackknightinc.com/category/press-releases
  • https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

UK Housing Market Predictions 2023: Will Prices Crash?

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UK Housing Market

The UK housing market is currently in a state of flux. After a period of rapid growth in 2022, house prices started to fall in 2023. This is due to a number of factors, including rising interest rates, the cost of living crisis, and a shortage of properties on the market.

In May 2023, the average UK house price was £286,000, which is £6,000 higher than 12 months ago, but £7,000 below the recent peak in September 2022. The rate of house price growth has slowed significantly in recent months and is expected to continue to fall in the coming months.

There are several reasons why the UK housing market is slowing down. Rising interest rates are making it more expensive to borrow money to buy a home. The cost of living crisis is also putting pressure on household budgets, making it less affordable for people to save for a deposit. And the shortage of properties on the market is making it difficult for buyers to find a home that meets their needs.

UK Housing Market Predictions 2023: Will it Crash?

It is too early to say whether the UK housing market is heading for a crash. However, it is clear that the market is cooling down. It is likely that house prices will continue to fall in the coming months, but the extent of the decline is uncertain.

Here are some predictions for the UK housing market in the next few years:

  • House prices are expected to fall by 5-10% in 2023.
  • The market is expected to remain subdued in 2024.
  • House prices are expected to start to recover in 2025.

However, it is essential to note that these are just predictions, and the actual outcome could be different. The UK housing market is a complex system, and it is difficult to predict how it will behave in the future.

UK Housing Market News And Report: National Statistics

The UK housing market is a cornerstone of the nation's economy, influencing both financial landscapes and individual lives. The United Kingdom House Market Report, compiled by the Office for National Statistics (ONS) using data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland, provides a detailed picture of the market's recent trends. Here are the key findings and implications of this report.

Main Points: Understanding the Market Pulse

The report opens with a summary of the most significant trends observed in the UK housing market:

Average UK House Price Growth

The provisional estimate indicates a 1.9% increase in average UK house prices over the 12 months leading up to May 2023. This growth rate, while healthy, is slightly down from the revised 3.2% recorded in April 2023. The average UK house price in May 2023 stood at £286,000, reflecting a £6,000 increase compared to the preceding year. However, it remains £7,000 below the peak observed in September 2022.

UK Housing Prices
Source: Office for National Statistics (ONS), released 19 July 2023, ONS website, statistical bulletin, UK house price index: May 2023

Regional Dynamics

Regionally, the report highlights varying growth rates. The average house prices in May 2023 were £304,000 in England (1.7% increase), £213,000 in Wales (1.8% increase), £193,000 in Scotland (3.2% increase), and £172,000 in Northern Ireland (5.0% increase). Of note, the North East region boasted the highest annual percentage change in the UK, with house prices rising by 4.0% in the 12 months leading to May 2023. In contrast, the East region experienced no change (0.0%) during the same period.

UK House Price Trends
Source: Office for National Statistics (ONS)

Unveiling UK House Price Trends

The report further delves into the intricacies of house price trends in the UK:

  • Annual Inflation Trends: Comparing annual inflation rates, the provisional estimate for the 12 months to May 2023 indicates a 1.9% increase. This marks a decline from the revised estimate of 3.2% in the previous 12 months and the peak of 14.1% observed in July 2022.
  • Seasonal Adjustments and Transactions: May 2023 witnessed a seasonally-adjusted decrease of 0.4% in the average UK house price, following a 0.5% month-on-month increase in April 2023. However, these figures should be interpreted with caution, considering the impact of the COVID-19 pandemic on housing transaction supply.

UK House Prices by Country

A substantial portion of the report is dedicated to analyzing house prices across different UK countries:

England's Leading Position: The average house price in England experienced a 1.7% increase over the 12 months leading to May 2023, reaching £304,000. However, this growth rate was lower than the 3.4% increase recorded in the 12 months ending April 2023.

Scotland's Soaring Prices: Scotland showcased remarkable growth, with average house prices rising by 3.2% in the 12 months to May 2023, a substantial improvement from the 1.8% growth observed in the previous period. The average house price in Scotland reached £193,000 in May 2023.

Wales and Northern Ireland Trends: Wales experienced a 1.8% increase in average house prices over the same period, reaching £213,000 in May 2023. Meanwhile, Northern Ireland exhibited exceptional growth, recording a 5.0% rise and maintaining its reputation as the most affordable UK country to purchase property, with an average house price of £172,000.

Regional Insights: House Prices in England

The report also sheds light on regional variations within England's housing market:

While the North East continued to have the lowest average house price of all English regions, standing at £159,000 in May 2023, it also displayed the highest annual house price inflation at 4.0%. This is a slight decrease from the 5.7% observed in April 2023.

  • London's Premium Status: London retained its position as the most expensive region to purchase property in the UK, boasting an average price of £526,000 in May 2023.
  • East of England's Trend: Interestingly, the East of England exhibited the lowest annual house price inflation among English regions, with average prices remaining largely unchanged (0.0%) in the 12 months to May 2023, following a 2.1% increase in the previous period.
UK Home Prices
Source: Office for National Statistics (ONS)

Conclusion: A Window into the UK Housing Market

The United Kingdom House Market Report provides invaluable insights into the complex and ever-changing landscape of the nation's housing market. From inflation trends to regional disparities, this report equips policymakers, analysts, and the public with essential data to make informed decisions and navigate the intricate world of real estate. As the market continues to evolve, reports like these play a crucial role in shaping our understanding of the economic and social factors that drive this integral sector of the UK economy.

Sources:

  • https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/may2023

Will the Housing Market Crash in 2024: Predictions & Trends

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housing market predictions

The housing market today is a topic of much debate among experts. While there is no consensus on whether the historically tight housing market will loosen or not, it is evident that the market has cooled significantly from its previous highs. The housing market today is still a seller's market. Home prices are rising, inventory is low, and mortgage rates are increasing.

This makes it a challenging time to buy a home, but there are still opportunities for buyers who are prepared. In this post, we will discuss the latest housing market predictions & forecasts. Despite initial concerns of a housing market crash comparable to the Great Depression due to the pandemic, the market has remained stable. However, there are key factors to consider, such as rising home prices and potential declines in home sales due to supply-demand imbalances.

Main outlook for the housing market in the coming months and years:

  • The housing market is expected to continue to cool down in the coming months, as rising mortgage rates and inflation make it more expensive to buy a home.

  • However, home prices are still expected to rise, albeit at a slower pace.

  • The housing market is expected to remain a seller's market for the foreseeable future, as demand for homes continues to outstrip supply.

The impact of higher mortgage rates and recession fears has contributed to the market's cooling from its peak earlier this year. Nevertheless, there are other factors that may influence the market's pace and favorability for both buyers and sellers. The market is gradually shifting away from being heavily skewed towards sellers, moving towards more balanced conditions. Buyers are still showing interest, maintaining some level of competition, particularly for attractively priced homes.

While real estate firms generally do not predict a financial or foreclosure crisis on the scale of 2008, they do anticipate a return to more typical housing fundamentals. This moderation may be driven by increasing salaries and declining home prices. As the correction takes place, the housing market is expected to reach a more reasonable valuation and avoid being overvalued.

ALSO READ: Real Estate Housing Market Trends for February 2023

Mortgage rates will likely play a significant role in determining the decline in home values. Interest rates have a substantial impact on the real estate market, influencing mortgage payments, housing demand, and prices. Although home prices are still experiencing growth, the rate of increase has slowed compared to earlier in the year. Despite this, buyer interest remains high, resulting in a somewhat competitive market, especially for homes that are priced attractively and possess desirable features.

However, concerns persist regarding the housing market, particularly regarding the shortage of housing supply and rising interest rates. The shortage of supply has been a primary driver of home price growth, but the increasing interest rates are discouraging potential sellers and new construction. As a result, there is limited hope for an improvement in the housing supply and the establishment of a sustainable market that would benefit from increased inventory.

The significant increase in mortgage rates since last year has further exacerbated the already expensive housing market, making it even less affordable. Home prices saw a meteoric rise during the pandemic, driven by factors such as high demand, low supply, and record-low mortgage rates. However, the sudden surge in mortgage rates has slowed the market's growth and affordability, posing challenges for buyers looking to enter the market.

As we explore the latest housing market predictions and forecasts, it becomes evident that the market's trajectory remains uncertain. Factors such as interest rates, supply-demand dynamics, and affordability will continue to shape the housing market. Staying informed about these predictions will be crucial for prospective buyers, sellers, and industry professionals navigating the ever-evolving housing landscape.

Housing Market Predictions for 2024

The housing market in the United States has been a topic of keen interest and speculation in recent times. Zillow, a prominent player in the real estate industry, has made a bold prediction that U.S. home prices will experience a significant jump of 6.5% by July 2024.

Zillow's Optimistic Forecast for the Housing Market 

Back in February, Zillow's housing economists made a noteworthy call that U.S. home prices had reached their lowest point and would see a climb of 0.5% over the subsequent 12 months.

In the months leading up to this prediction, the U.S. home prices, as tracked by the Zillow Home Value Index, not only rebounded but also hit a new all-time high. This resurgence was attributed to the strong demand driven by limited inventory levels, outweighing the impact of elevated mortgage rates.

Zillow consistently revised its home price forecast upwards as the U.S. house price rebound continued. The latest revision projects a 6.5% rise in U.S. home prices between July 2023 and July 2024, surpassing the 6.3% forecast made just the previous month. It's worth noting that U.S. home prices, according to the Case-Shiller index, have historically averaged an annual increase of 5.5% since 1975.

“Limited for-sale inventory continues to push home prices upward even as mortgage rates remain elevated,” explained Zillow housing economists. They highlighted that the number of homes listed for sale in July was just over half of those in the same month of 2019.

Additionally, new listings entering the market were 29% fewer than the typical levels before the pandemic. This supply shortage has led to heightened competition among potential buyers. Homes that went under contract in July did so in just 12 days, significantly faster than the 2018 and 2019 averages.

Regional Variations

While Zillow anticipates a 6.5% increase in national home prices over the next year, its forecast model points out that 120 of the nation's 400 largest housing markets will witness even greater growth rates of 7.0% or more during the same period. These markets are spread across various regions of the country, including the West, South, Midwest, and Northeast.

Top 10 MSAs Where Home Prices Will Grow by July 2024

Here's a look at the top 10 Metropolitan Statistical Areas (MSAs) where home prices are projected to experience substantial growth by July 2024:

  • Atchison, KS: Projected increase of 16.5%
  • Rio Grande City, TX: Projected increase of 16.3%
  • Parsons, KS: Projected increase of 15.7%
  • West Plains, MO: Projected increase of 13.8%
  • Jackson, WY: Projected increase of 13.1%
  • Thomaston, GA: Projected increase of 12.9%
  • Steamboat Springs, CO: Projected increase of 12.9%
  • Edwards, CO: Projected increase of 12.7%
  • Maryville, MO: Projected increase of 12.6%
  • McMinnville, TN: Projected increase of 12.5%

Alternate Views

While Zillow's optimism is palpable, it's important to note that not all experts share the same sentiment. For instance, Morgan Stanley foresees a different trajectory for U.S. home prices in 2024. Their perspective suggests that home prices will experience a decline during this period, offering potential relief for prospective buyers.

Despite the differing opinions, one thing remains clear: the U.S. housing market is in a state of flux, influenced by factors such as inventory levels, mortgage rates, and economic conditions. As the months roll on, it will be fascinating to see how these predictions unfold and whether the market continues its upward trajectory or experiences the anticipated corrections.

Housing Market Predictions Until June 2024

As we look ahead to the coming months, CoreLogic provides us with valuable insights into the trajectory of the housing market until June 2024. Let's delve into the forecasts and assessments that shed light on what lies ahead for potential buyers, sellers, and industry observers.

Year-Over-Year Growth and Monthly Trends

As of June 2023, home prices nationwide, including distressed sales, experienced a year-over-year increase of 1.6% compared with June 2022. This growth in home prices reflects the resilience of the housing market and its ability to navigate changing economic conditions.

On a month-over-month basis, the momentum continued, with home prices rising by 0.5% in June 2023 compared with May 2023. CoreLogic emphasizes that these figures are subject to revisions as new public records data become available. Ensuring accuracy is paramount, and CoreLogic's commitment to incorporating the latest data ensures that the results remain up-to-date and reliable.

Identifying Housing Markets at Risk of Price Decline

The CoreLogic Market Risk Indicator (MRI) provides a monthly update on the overall health of housing markets across the nation. This valuable tool assesses the probability of home price changes over the next year and identifies markets that are at risk of potential declines. According to the MRI, several markets stand out as being at very high risk (with a probability of 70% or higher) for a decline in home prices over the next 12 months.

The markets flagged as very high risk include:

  • Cape Coral-Fort Myers, FL
  • North Port-Sarasota-Bradenton, FL
  • Provo-Orem, UT
  • Spokane-Spokane Valley, WA
  • Lakeland-Winter Haven, FL

These areas are likely to experience challenges in maintaining or increasing home prices, and potential buyers and sellers in these markets should take note of these risk indicators.

National Housing Forecast: Steady Price Increases

Housing Market Predictions for 2024
Source: CoreLogic

Looking at the bigger picture, the CoreLogic Home Price Index (HPI) Forecast offers insights into the anticipated changes in home prices on both a monthly and year-over-year basis. The forecast suggests that home prices are projected to increase by 0.6% from June 2023 to July 2023 on a month-over-month basis. Furthermore, a year-over-year increase of 4.3% in home prices is expected from June 2023 to June 2024.

This forecast indicates that the housing market is poised for steady growth over the coming months. However, it's important to remember that forecasts are based on a combination of factors, including economic trends, interest rates, and local market conditions. Unforeseen events can also impact the trajectory of the housing market.

Hence, we can form an opinion that the landscape of the U.S. housing market is a complex tapestry woven by economic currents, supply and demand dynamics, and evolving trends. The housing market predictions until June 2024 offer a compass for individuals seeking insights into the future of home prices and market conditions. In this realm of forecasting, three significant players stand out: Zillow, CoreLogic, and Morgan Stanley.

Zillow harnesses its expertise to project a future where U.S. home prices could see a substantial 6.5% surge by July 2024. This optimistic projection underscores the resilience of the housing market and its potential to overcome challenges.

CoreLogic, on the other hand, provides a nuanced view of the market's health through its Market Risk Indicator (MRI). It identifies areas at a very high risk of experiencing home price declines, offering valuable insights for potential buyers and sellers to navigate market uncertainties.

Meanwhile, Morgan Stanley introduces a different perspective, anticipating the possibility of a decline in home prices during 2024. This stance reflects the intricate dance between economic factors and market dynamics.

As individuals traverse the path forward, the insights offered by these forecasts empower them to make well-informed decisions. Whether one is considering purchasing a new home, selling a property, or simply observing market trends, the knowledge gained from these analyses serves as a powerful tool that guides choices.

Staying vigilant is key as we venture into the coming months, as economic shifts, interest rate fluctuations, and local market dynamics continue to play a vital role in shaping the housing market. The interplay of these factors is at the heart of the intricate web that defines the housing landscape.

The housing market's trajectory is a spectrum of possibilities, from Zillow's optimistic projection to Morgan Stanley's cautionary anticipation. The interaction of supply and demand, the influence of interest rates, and the broader economic environment will collectively determine the path of U.S. home prices.

In this evolving narrative, prospective buyers, sellers, and industry experts are poised to closely monitor unfolding developments. These predictions have the potential to reshape the contours of the U.S. housing market, influencing strategies and decisions.

Ultimately, understanding the forecasted predictions and trends equips individuals with the insights they need to navigate challenges, seize opportunities, and make informed decisions in a dynamic and ever-evolving housing market.

Housing Market Predictions for 2023

Housing Market 2023 Predictions

Fannie Mae, a leading source of mortgage financing in the United States, has released its latest housing market forecast. The forecast provides insights into the anticipated trends and expectations for home sales, housing starts, and mortgage originations.

Home Sales Forecast:

Fannie Mae's overall home sales forecast remains relatively stable, with a slight revision in the numbers. The projected total sales for 2023 have been revised upward to 4.86 million units, compared to the previous estimate of 4.84 million units. This revision suggests a slightly more optimistic outlook for home sales in the current year. However, for 2024, there has been a slight downward revision to 5.01 million units, previously estimated at 5.03 million units.

Housing Starts Forecast:

The forecast for housing starts, which refers to the number of new residential construction projects initiated, has seen an upward revision. This revision is mainly attributed to a more positive outlook for near-term single-family housing starts. While the adjustment is modest, it indicates a favorable trend in new construction activity.

Mortgage Originations Outlook:

Fannie Mae's purchase mortgage originations outlook has experienced a modest upward revision, aligning with the revision in home sales. This adjustment reflects the expectation of increased mortgage originations in line with the projected growth in home sales. However, the positive revision in purchase mortgage originations has been offset by a downward revision in refinance originations. As a result, the overall impact on total originations for 2023 is minimal, with the projected volume remaining at $1.65 trillion, unchanged from the previous forecast of $1.66 trillion.

Looking ahead to 2024, Fannie Mae anticipates a further increase in total originations, with a projected volume of $2.03 trillion. This figure represents a slight upward revision from the previous estimate of $2.02 trillion. The revised outlook for mortgage originations in 2024 suggests continued growth in the housing market and mortgage financing activities.

In conclusion, Fannie Mae's housing market forecast indicates a relatively stable outlook for home sales, housing starts, and mortgage originations. While there have been slight revisions to the numbers, the overall trends point towards a resilient housing market with modest growth expectations. As the market evolves, it will be essential to closely monitor these projections to make informed decisions in the real estate and mortgage sectors.

According to the National Association of Realtors (NAR), home prices are expected to increase by 1.2% this year. This projection indicates a continued upward trend in the housing market. Additionally, NAR predicts that mortgage rates will plateau at about 6.4%.

Goldman Sachs and Wells Fargo have both recently made forecasts for the US housing market in 2023, and their predictions suggest a decline in home prices. Goldman Sachs is forecasting a more significant drop, with a projected decline of 7.6% from the peak, while Wells Fargo predicts a more modest decrease of 5.5%. Both banks attribute the anticipated drop to the current housing supply shortage, which has been a persistent issue in recent years.

It's worth noting that Wells Fargo also highlighted that there may be significant discrepancies in the extent of the price fluctuations depending on the desirability of a particular location. This could mean that some areas may experience larger price drops than others, depending on factors such as local economic conditions, population growth, and housing supply and demand dynamics.

The accounting firm KPMG LLP's forecast for the housing market in 2023 looks bleak. Existing home sales are predicted to drop by 23% from 2022, which would be a decrease not seen since 2007. The drop is expected to be driven by single-family home sales due to the limited supply and high prices. However, condos are predicted to fare better.

The number of purchase applications has dropped by over 40% from a year ago in February. Buyers are betting on rate cuts by the Fed as their mortgages reset in 2024, and they are using adjustable-rate mortgages (ARMs) to get into the few homes that are listed. Despite the spike in rates and erosion in affordability, millennials still make up over half of the purchase applications.

The share of those who have locked into ultra-low rates or paid off their mortgages has surged. Those homeowners have a natural hedge against escalating shelter costs and some have chosen to rent out their homes to cash in on the demand for single-family rentals, further constraining the stock of homes.

Home prices are predicted to fall between 7% and 10% depending on the measure, with the S&P CoreLogic Case-Shiller Home Price Index expected to drop another 8% in 2023, bringing prices to the still elevated levels of late 2021. Despite the rise in demand for rentals, rents have fallen more rapidly than home prices, and the Fed is counting on those declines to cool inflation. However, the tight labor market may place a floor under how much rents fall in the hottest markets, hence the Fed's focus on the labor market.

According to Freddie Mac's Housing Sentiment in the First Quarter of 2023, market confidence in the housing market has rebounded somewhat quarter-over-quarter, despite payment concerns remaining unchanged among both homeowners and renters. Specifically, 43% of respondents are confident the housing market will remain strong over the next year, up 9 percentage points from last quarter but down 15 percentage points compared to last year.

However, concerns about housing affordability persist, with 59% of renters and 28% of homeowners spending more than 30% of their monthly income on housing. Additionally, over half of the respondents (54%) expressed concerns about making housing payments, with 70% of renters and 44% of homeowners feeling this way.

In terms of market activity, only 18% of respondents indicated they are likely to buy a home in the next six months, while 14% of homeowners say they are likely to sell in the same period. About 16% of homeowners plan to refinance in the next six months. Overall, while market confidence has rebounded somewhat, concerns over housing affordability and payment continue to persist.

Freddie Mac's Housing and Mortgage Market Outlook, released in May, provides valuable insights into the current state of the housing market and predictions for the future. The outlook addresses various aspects, including home sales, home prices, and mortgage originations.

Home Sales:

Higher mortgage interest rates have significantly impacted affordability, resulting in a dampening effect on home sales. The report anticipates that this trend will continue to weigh on home sales. Additionally, the limited inventory is expected to persist as existing homeowners, who have locked in low mortgage rates, are less likely to list their homes for sale. However, if the economy avoids a recession and unemployment remains stable, forced selling is unlikely to increase. With a stable interest rate environment, home sales are projected to level off and gradually resume modest growth. Nevertheless, it may take several years before volumes return to the levels observed in 2021.

Home Prices:

While home prices have generally shown positive trends in most markets, the report maintains a cautious outlook due to the potential impact of weakening employment. It is still too early to separate the true signal from the noise. The report's official corporate forecast predicts a 2.9% decline in house prices over the course of twelve months through Q1 of the following year. Furthermore, an additional 1.3% decline is projected over the subsequent twelve months.

Mortgage Originations:

The limited number of mortgages that are in the money for rate refinancing is expected to keep refinance origination volumes low. A substantial decrease in mortgage rates would be required to trigger a significant number of refinances. However, as rates fluctuate, some opportunities for refinancing may arise, resulting in a trickle of refinances.

Additionally, there continues to be demand for refinancing based on non-rate-related factors, such as the cancellation of FHA Mortgage Insurance Premiums by refinancing into a conventional loan and term extension. On the purchase side, low levels of home sales combined with falling national house prices are likely to keep home purchase originations relatively flat for the current year. However, as home price growth turns positive and home sales gradually increase, purchase originations are expected to resume modest growth in the latter half of this year and beyond.

Housing Market Predictions For the Next Few Years

The housing market is far better than it was a decade ago. During the two years of the pandemic, the housing industry experienced a boom, with the most significant annual increase in single-family house values and rentals, historically low foreclosure rates, and the highest number of home sales in 15 years, totaling 6.9 million for the entire year of 2021. Over those two years, national home prices increased by around 33%.

The market was driven by record-low borrowing rates in 2020 and 2021, as well as a supply constraint due to underbuilding. The enormous demand from first-time buyers is almost as important as the limited new supply. The housing market is also being driven by exceptionally favorable age demographic trends. But soaring interest rates are making mortgage payments more expensive since last year and cooling the hot real estate market.

The overarching concern is whether or not the housing market will crash, and if so, when. The simple answer is that it will not crash anytime soon and we certainly don't see a housing market crash coming in 2023 or 2024. Rising rates are cooling the market as some expected but the prices are still rising at a slower rate.

The current trends and the forecast for the next 12 to 24 months clearly show that most likely the housing market is expected to see a positive home price appreciation. In recent years, the price of homes has climbed dramatically. Many prospective buyers, especially those with limited financial resources, are eager to hear whether and when home prices will become more accessible.

Here is when housing market prices are going to crash. While this may appear to be an oversimplification, this is how markets operate. When demand is satisfied, prices fall. In many housing markets, there is an extreme demand for properties at the moment, and there simply aren't enough homes to sell to prospective buyers. Home construction has been increasing in recent years, but they are so far behind catching up. Thus, to see significant declines in home prices, we would need to see significant declines in buyer demand.

Demand declines primarily as a result of rising interest rates or a slowing economy in general. Ultimately, for rising interest rates to destroy home values, we'd need substantially less demand and far more housing supply than we presently have. Even if price growth moderates this year, it is extremely improbable that home prices will crash. Thus, there will be no crash in home prices; rather, there will be a pullback, which is normal for any asset class. The home price growth in the United States is forecasted to just “moderate” in 2023.

Affordability will be a concern for many, as home prices will continue to rise, if at a slower pace than the previous year. With 10 years having now passed since the Great Recession, the U.S. has been in the longest period of continued economic expansion on record. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy.

However, hot economies eventually cool, and with that, hot housing markets move more toward balance. Housing market forecasts are essentially informed guesses based on existing patterns. While the real estate pace of last year appears to be reverting to seasonality as we enter 2023, demand is not waning.

Increasing interest rates will almost certainly have a greater impact on the national housing market in 2023 than any other factor. While sellers remain in an advantageous position, price stability and the continuation of competitive interest rates may provide some much-needed relief to buyers this year. Housing supply is and will likely remain a challenge for some time as labor and material shortages, as well as general supply chain issues, delay new construction.

The housing market will continue to cool down, but not crash. Record-low borrowing rates, supply constraints, and first-time buyers drove prices up, but prices are expected to appreciate slower or remain flat for the next 12-24 months. Rising interest rates may lead to a pullback in prices and improve affordability. Nonetheless, it remains a concern as prices make it hard for some buyers to enter the market. Overall, the market will remain strong, but hot markets will move toward balance.

While the national housing market won't crash, several regional markets may see a decline in home prices in the coming years due to rising interest rates. Higher interest rates could lead to a decrease in affordability, which may result in fewer buyers in certain areas. As a result, regions that were previously experiencing rapid price growth may experience a slowdown or even a decline in home prices. However, it is worth mentioning that this would likely be a temporary setback, as long-term demographic and economic trends are still in favor of the housing market.

References

  • https://www.realtor.com/research/
  • https://www.realtor.com/research/blog/
  • https://www.bankrate.com/mortgages/mortgage-rates/
  • https://www.blackknightinc.com/
  • https://www.freddiemac.com/research/forecast
  • https://www.kpmg.us/insights/2023/march-2023-economic-compass.html
  • https://www.nar.realtor/research-and-statistics/housing-statistics/
  • https://www.corelogic.com/intelligence/u-s-home-price-insights/
  • https://www.zillow.com/research/daily-market-pulse-26666/
  • https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx
  • https://www.investopedia.com/personal-finance/how-millennials-are-changing-housing-market

Debt Ceiling & Housing Market: Will it Crash in 2023?

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Debt Ceiling & Housing Market: Will it Crash?

On June 3, President Joe Biden signed a debt limit bill, averting a potential U.S. default. The debt limit, also known as the debt ceiling, is a crucial aspect of the country's fiscal management. In this blog post, we will explore what the debt ceiling is, why it is significant, and what occurred regarding the debt limit in 2023. Lastly, we will closely examine the potential consequences of the debt ceiling on the housing market, shedding light on the forecasts and insights provided by industry experts.

What is the Debt Ceiling?

The debt ceiling refers to the maximum amount of money that the United States government can borrow to meet its financial obligations. It is a statutory limit set by Congress, indicating the total debt the government can accumulate. Once the debt reaches its limit, Congress must take action to raise the ceiling and allow the government to borrow more funds.

Why is the Debt Ceiling Significant?

The debt ceiling plays a critical role in managing the nation's finances. It serves as a mechanism to control government spending and ensure fiscal responsibility. By setting a borrowing limit, the debt ceiling encourages policymakers to make informed decisions regarding spending, taxation, and budgetary priorities. Failure to raise the debt ceiling can lead to severe consequences, including a potential default on debt payments.

The 2023 Debt Limit Bill

In 2023, the United States faced the need to raise the debt ceiling to avoid defaulting on its financial obligations. President Joe Biden signed a debt limit bill on June 3, ensuring that the government could continue borrowing money to meet its obligations. This action was crucial in maintaining the stability of the U.S. economy and preserving confidence in the country's financial system.

Implications of a Default

If the debt ceiling is not raised and the United States defaults on its debt, it can have severe consequences both domestically and globally. A default would erode investor confidence, increase borrowing costs, and potentially trigger a financial crisis. It could lead to a downgrade in the country's credit rating, negatively impacting the economy, and causing ripple effects in the global financial markets.

Congress Passes Debt Ceiling Package: A Comprehensive Overview

The new legislation suspends the nation's $31.4 trillion debt limit through January 1, 2025. This removes it as a potential issue in the 2024 presidential election. After months of stalemate and tense negotiations, Congress has passed the debt ceiling package just in time to prevent a potential government shutdown.

The legislation suspends the nation's debt limit until January 1, 2025, removing it as a potential issue in the 2024 presidential election. Non-defense spending will remain relatively flat in fiscal 2024, with a 1% increase in fiscal 2025. There will be no budget caps after fiscal 2025, only non-enforceable appropriations targets.

The package includes provisions for defense and non-defense discretionary spending. Non-defense discretionary spending will be rolled back to fiscal 2022 levels, with a limit of 1% annual growth for the next six years. Veterans' medical care will be fully funded, with an additional increase in support for the PACT Act's toxic exposure fund. Changes to the food stamps program will temporarily broaden work requirements while expanding exemptions for certain groups. Work requirements will not be introduced in Medicaid.

In terms of Covid-19 relief funds, approximately $28 billion in unobligated funds will be rescinded, but funding for Covid-19 vaccines, treatments, housing assistance, and the Indian Health Service will be retained. IRS funding will be repurposed, with $10 billion from fiscal 2024 and another $10 billion from fiscal 2025 appropriations allocated for non-defense areas.

Regarding student loans, borrowers will need to resume payments at the end of the summer as the pause on payments during the pandemic will not be extended. However, President Biden's plan to provide up to $20,000 in debt relief for qualifying borrowers will be maintained, along with the income-driven repayment plan.

The debt ceiling package does not make changes to climate and clean energy provisions, despite efforts by House Republicans to repeal clean energy tax credits and subsidies. It includes measures in the National Environmental Policy Act to enhance coordination and efficiency in federal agency decision-making. Additionally, the package expedites the construction of the Mountain Valley Pipeline in West Virginia.

Debt Ceiling & The Housing Market: Will it Crash?

The debate surrounding the debt ceiling and the potential for a government default on the national debt has raised concerns about its impact on various sectors of the economy. In this section, we will focus on the insights provided by Zillow regarding the potential fallout on the housing market in the event of a debt default. We will explore the projected effects on home sales, values, mortgage rates, and the overall economic landscape.

Zillow's Forecast: Severe Fallout in the Housing Market

According to forecasts by Zillow, a debt default could have significant implications for the housing market. In the most severe month following a debt default, home sales could drop by up to 23% compared to a no-default baseline forecast. Additionally, home values could be 5% lower than projected in a no-default scenario by the end of 2024. These projections highlight the potential negative impact on both buyers and sellers in the housing market.

Agreement to Raise the Debt Ceiling

House Speaker Kevin McCarthy and President Joe Biden reached an agreement to raise the debt ceiling, averting an immediate default. However, the agreement still needs to be voted on by Congress. The ongoing negotiations and uncertainty surrounding the debt ceiling underscore the importance of addressing this issue to avoid potential economic turmoil.

Rising Mortgage Rates in the Event of a Default

Zillow warns that if the government were to default, the average 30-year mortgage rate could peak at 8.4% in September. Such rates would mark the highest since the early 2000s. Rising debt yields and interest rates are expected as a consequence of default risk, leading to increased borrowing costs for homebuyers. This scenario could further dampen the housing market's recovery and stability.

Recession Risks and Unemployment Concerns

Experts suggest that a government default could trigger a recession, causing a significant decline in GDP and disrupting financial markets worldwide. Zillow emphasizes that spending cuts resulting from default could lead to furloughs among federal and state employees, as well as layoffs in industries indirectly connected to federal spending. These factors could contribute to rising unemployment rates and further economic instability.

In summary, Zillow's insights indicate that a debt ceiling default would have severe repercussions for the housing market, including decreased home sales, lower property values, and increased mortgage rates. The potential recessionary impact and rising unemployment rates are additional concerns. The agreement to raise the debt ceiling is a positive development, but it remains essential for policymakers to address long-term fiscal challenges and ensure the stability of the economy and housing market moving forward.

Sources:

  • https://www.zillow.com/research/debt-ceiling-32626/
  • https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit

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