The Seller’s Opportunity
With mortgage rates soaring to start 2022, and no end in sight, homeowners have started to wonder if this will lead to a home price loss. There is some good news for homeowners, and some bad news for buyers. Historically, higher mortgage rates, specifically a rise in rates by a percentage point of more, have still led to higher home prices. Home price appreciation does slow, but it does not decline. The latest data on home prices from CoreLogic shows why the seller’s opportunity still runs the market.
According to CoreLogic data, home price appreciation has been re-accelerating since November. This was the month we first started seeing an increase in mortgage rates as well. Depicted in the graph below shows the increase in home price appreciation in green.
Future Of Seller’s Opportunity
This price action we are seeing in the real estate market is largely due to the supply and demand in the housing market. With housing supply still near historic lows, prices will likely continue to increase until demand is destroyed. Right now, this is not the case, as potential homebuyers are still out in droves. This continues to add to the seller’s opportunity in today’s market. The increase in mortgage rates might seem like a deterrent to buyers, however, the opposite effect happened. More people were actually influenced to make the homeownership leap because rates were going higher quickly. According to Selma Hepp, Deputy Chief Economist at CoreLogic:
“Home price growth continued to gain speed in early spring, as eager buyers tried to get in front of the mortgage rate surge.”
Some more negative news for buyers that adds to the seller’s opportunity is that most experts are predicting similar price increases. While home price increases may moderate, they are still moving higher. According to an article from Fortune:
“. . . the swift move up in mortgage rates . . . doesn’t mean home prices are about to crash. In fact, every major real estate firm with a publicly released forecast model . . . still predicts home prices will climb further this year.”
What This Means For Sellers
For those who are debating on selling their homes this year, you should know that seller’s opportunity is at an all-time high. In today’s market, you have a great chance to have as many eyes as possible on your home. Not only will your home draw a lot of attention, it will also draw a record high price. Because of home price appreciation, real estate continues to outperform most asset classes in 2022. This comes off a year where real estate was the strongest performing asset, tied with energy. The seller’s opportunity looks to remain strong and will likely be the trend we follow for the following months. With record high home prices comes record high equity. When selling your home, you can use this equity you gained for many things, including the down payment on your next home. Seller’s opportunity is the trend, and looks to remain.