Mortgage interest rates have been increasing rapidly in the recent months as the Federal Reserve continues to battle historically high inflation. This has already resulted in mortgage applications being down 6% from a year ago. Needless to say, rapidly rising mortgage interest rates combined with already high home prices is pricing many would-be home buyers out of the market. The end result of these dynamics may very well involve home sellers becoming more realistic with their listing prices. In fact, we are already beginning to see price reductions for home listings at their highest level since 2015. With this said, listings experiencing price reductions still only account for 3.2% of the total number of homes on the market.
Housing market forecast
Although we will inevitably see more would-be home buyers being priced out of the market due to home prices and higher mortgage interest rates, we should also continue to see inventory constraints moving forward. In fact, as mortgage interest rates increase this may also discourage more homeowners from selling. The National Association of Realtors® has forecast home sales to slip 10% in 2022, mostly due to rising mortgage rates that are pricing out more would-be buyers. With this said, home prices are still predicted to rise by approximately 5% this year.
For perspective, a first-time home buyer could expect to pay approximately 40% more for the same home this year when compared to last year. This increase is due to the combined impact of a higher home price plus a higher mortgage interest rate. With this said, it is obvious that an overall slowdown in the housing market is inevitable.
Although no state is immune from the rapid home price increases and the ongoing mortgage interest rate increases, The Sunshine State is relatively well poised to deal with these challenges. Given the fact that the state of Florida continues to see a record number of Americans moving here to paradise, this should keep the demand for housing stronger than most other states. Furthermore, it is important to remember that many of these transplants are moving to Florida from more expensive markets. According to the most recent closed sale data, 45% of homes that went under contract found a buyer within a week. In addition, the average home sold for 2.4% above its asking price.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!