How Will Interest Rate Hikes and Ever-Increasing Home Prices Affect You?
With the Federal Reserve announcing they plan to increase interest rates this spring, as well as no end in sight for increasing housing prices, what does this mean for those looking to buy in 2022?
In 2021, the average home price in the Denver Metro area increased by almost 18%, bringing home prices to an absolute high. 2022 is expected to continue that price increase, however, not by nearly the numbers we saw last year. Experts estimate that by the end of 2022, housing prices will have increased by approximately 8% signaling a large slowdown and a more level playing ground between supply and demand. Still this is no small comfort to those looking to purchase this year, especially when compounded with the announcement that the Federal Reserve will be increasing interest rates. We still don’t know the full plan set in place by the Fed, however many experts believe the rates will increase several times this year, but remain below a 1% overall increase, protentially bringing rates from 3.4% now to around 4.25%. This may mark the first time since 2019 that rates have surpassed the 4% mark, and quite a difference compared to our all time low of 2.65% in January of 2021.
So, what does this mean for people looking to buy in 2022? For current home owners, not much. The increase in home prices will offset the interest rate change, especially for those looking to downsize or those capable of putting large downpayments on their new purchase. For first time home buyers, this is likely to impact what and where they can afford to purchase, however with more new home construction than ever, this year is likely to be much less of a biding war on offers, allowing a little more flexibility on buying power. The good news for first time home buyers, is there is light at the end of the tunnel, as a more level playing field between supply and demand is just on the horizon.
Don’t think you can afford a home in this market? Reach out to The Strange Team today and we can show you how you can make the jump with confidence and security.