Are rates about to go WAY UP?
Watch the original video: Are rates about to go WAY UP?
Monthly Mortgage Market Update for November 2021. In this month’s video I talk about current mortgage rates where they are at and where they are headed, the housing market, and inflation. Watch the video above to learn more. (Below is a summary of each topic I discussed in the video)
📈 Mortgage Rates & The Federal Reserve
This month, the Federal Reserve made a decision to begin pulling back on their Asset Purchase Program, referred to as quantitative easing. This program has contributed to artificially keeping mortgage rates low. So as they pull back and we head into 2022, we project that rates will rise. Not a significant amount, but we should expect rates to reach the high 3s. This is something that we will keep our eyes on and we will continue to update you as we know more.
There are a few reasons why the Federal Reserve is wanting to make some changes. The first being inflation. As most of us have seen, the cost of goods is rising, there are supply chain issues, and many Americans are out of work. These are all factors that contribute to changes in mortgage rates, home prices, and overall inflation.
🤓 Housing Market Predictions
Many Americans are expecting home prices to fall. Personally I do not expect this to happen. We must consider the demand and compare it to the supply. If we go back to 2006, right before the great recession began, there were a couple things that existed at that time that are much different than today. First and foremost compared to 2006, there are ~12 million more households and only ~3 million more homes for sale. Simply put, there are more people who need to rent or buy homes than there are available. As long as these conditions exist, the pressure on home and rent prices will continue.
Another factor to rising costs are the issues associated with building a home. These issues include the rising cost of building supplies and the changes in regulations. For example in 2021, California changed regulations requiring all new homes to have solar power. Until we see de-regulation and the cost of goods and supplies decrease we will not see the housing market cool off; simply because we cannot meet the demand. Unfortunately, these are issues that no one believes will be solved anytime soon. Meaning in 2022 most experts predict, the housing market will continue to be hot.
Now if we look at the housing market in Shasta County, currently we do have more inventory than we did last year. It is definitely an easier market to buy compared to even 6 months ago. We are no longer seeing the effects of the pandemic on the market. But, that is not to say there aren’t still people moving into the County. If a house is priced right you will see multiple offers and sellers receiving more than the asking price. Overall, I believe right now is still a great time to buy.
🏠 Let’s talk about Rent Prices
Rents are still continuing to rise. Many realtors are sharing that vacancies are at an all time low. This is not a trend specific or unique to California, but has been reported all across the nation. Additionally, rent prices in California continue to rise approximately 20% each year.
👉🏽 Moving Forward
As we move forward we must keep an eye on mortgage rates and inflation. Our Federal Reserve is still reporting that inflation is transitory, meaning at some point it will fade. Most of the inflation we are seeing is based on supply chain issues and as this problem is resolved we should see inflation decrease. The good news is that most of us expected rates to rise as a result of the recent announcement to pull back on the Asset Purchase Program. But surprisingly, rates were not really affected. Mortgage rates are still relatively low depending on the type of loan you are looking at, and remain in the mid 3s.
As always if there are any real estate questions you may have, please do not hesitate to contact me. For example, if you need to refinance or are considering moving out of state, these are things we can certainly help you with.
I hope you have an amazing Thanksgiving. God bless you and your family. Talk to you soon.