• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

ACME NEWS ONLINE

The Pinnacle of Online News Reporting

ACME NEWS ONLINE
The Pinnacle of Online News

  • Home
  • US
  • BUSINESS
  • LIFESTYLE
  • REAL ESTATE
  • TECH/SCIENCE
  • About/Contact

Rising mortgage rates won’t be enough to end U.S. housing boom – San Bernardino Sun

March 18, 2022 by Staff Reporter

By Jo Constantz | Bloomberg

Rising mortgage rates are already pricing out first-time homebuyers, but it’s not enough to extinguish the U.S. real estate frenzy.

U.S. mortgage rates crossed 4% this week for the first time in nearly three years, a rapid ascent that has taken some industry experts by surprise.

While higher borrowing costs may cool the pace of price increases modestly in some markets, the severe housing shortage and intense pent-up demand for real estate — from both traditional buyers and investors — will continue to drive housing costs higher, according to economists.

“Even if a number of buyers get knocked out of the running or put their plans on hold, some will still be forging ahead,” said Jeff Tucker, senior economist at Zillow. “There are a lot of people determined to make that home purchase – and because there are so few homes available, it doesn’t take that many determined buyers to keep the gears in motion.”

Tucker acknowledged that the quick increase in borrowing costs this year has been a humbling reminder that the housing market and rates are notoriously hard to predict, especially in a tumultuous global economy.

While Zillow’s most recent model had home-price appreciation peaking at 22% in May and then gradually slowing to 18% by February 2023, the recent spike in rates has led Tucker to cut his forecasts. The pace of price growth is more likely to slow to about 13% by early next year, he said.

Stoked demand

So far, rising rates have stoked demand as buyers rush to lock in purchases before borrowing costs move higher. Nearly 70% of offers written by Redfin agents in February faced bidding wars, according to the brokerage’s seasonally-adjusted measure of competitiveness. That’s the highest level in data dating back to April 2020, just before the pandemic housing rally began.

“It’s the most competitive time in history to purchase a home because mortgage rates are rising from historic lows amid a worsening supply shortage,” said Redfin Chief Economist Daryl Fairweather. “Bidding wars intensified this year after rates started spiking, which lit a fire under buyers.”

With home prices rising at a record-breaking 19% in 2021 and the highest inflation in 40 years wearing down budgets, many would-be buyers have given up. The percentage of people who think now is a good time to buy has plummeted, even from the depths of the 2008 financial crisis.

Higher rates are likely to keep some buyers on the sidelines. But the U.S. housing market is being driven by supply and demand, and prices will be pushed higher as buyers keep bumping into the shortage of available homes.

Right now, homes are being snapped up almost as soon as they’re listed, leading to critically low inventory. In places like Austin, Texas, that have seen an influx of tech workers with hefty salaries and stock options, it’s hard to imagine prices cooling off, according to Ryan Leahy, regional president of Hometown Lenders in Austin.

“That won’t happen here,” Leahy said. “There’s no way on God’s green earth.”

View Original Source

Filed Under: REAL ESTATE

Primary Sidebar

More to See

Here are some of the oddest things you can rent | Business News

If you know of local business openings or closings, please notify us here.PREVIOUS OPENINGS AND CLOSINGS· Air Products and Chemicals Inc.'s chosen … [Read More...] about Here are some of the oddest things you can rent | Business News

Thyroid problems linked to increased risk of dementia — ScienceDaily

Older people with hypothyroidism, also called underactive thyroid, may be at increased risk of developing dementia, according to a study published in … [Read More...] about Thyroid problems linked to increased risk of dementia — ScienceDaily

Man wins $4M Mega Millions lottery prize with fortune cookie numbers

A man in North Carolina won big after he decided to use his fortune cookie numbers to play the lottery.Gabriel Fierro, 60, picked up the cookie while … [Read More...] about Man wins $4M Mega Millions lottery prize with fortune cookie numbers

Privacy Policy | Terms and Conditions | About/ Contact
Copyright © 2022 · SLD Chicago . Log in