Podcast - 085: The housing market is decelerating, but not depreciating

In this episode, realtor Anthony Luevanos and lender Angel Luevanos cover inflation, mortgage rates, buyer demand, home prices, and housing market projections for 2022.

Inflation rose to 9.1% in June, and core inflation (excluding volatile food and energy prices) increased to 5.9%. 

​​“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.” - Greg McBride, Chief Financial Analyst at Bankrate

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 5.82%. One year ago, that rate was 3.11%.

With interest rates increasing, mortgage demand is falling. According to the Mortgage Bankers Association, it currently sits at its lowest level since 2000.

Southern California just experienced its first median sales price drop from May to June since 2010. Yet, the price still soared from June 2021 at $679,000 to $750,000 this year. 

Although buyer demand is dropping, we simply have too much demand compared to our current supply. That’s why experts are not calling for prices to decline. Instead, they’re forecasting they’ll continue to climb, just at a moderate pace this year. On average, homes are projected to appreciate about 8.5% in 2022

The housing market is decelerating but not depreciating. Home prices will likely increase moving forward on a year-over-year basis, but just at a slower rate.

If anyone is looking to purchase a home and qualifies, this may be the best time we have seen in two years. The buyer frenzy is over, and the opportunity to get into a home is much easier.