After historic lows, mortgage rates are back on the rise in the United States and Canada. So, what does this mean for sellers? Is the era of the red hot seller’s market coming to an end? If you’re asking the question, “should I sell my home now?” You’re in the right place. Keep reading to learn what these rising mortgage rates mean for home sellers in 2022.
It Means Changes to What Your Home Sells For
If you’re eager to make the most out of all of the repairs and upgrades you’ve put into your house, your window to do so might be becoming more narrow — but it’s not here quite yet! The good news is that mortgage rates don’t skyrocket overnight. Instead, they increase gradually. Right now, the mortgage rates are 3.1% in the U.S. and 3.9% in Canada. You can expect those rates to rise to 4% and above by the end of 2022. These rate jumps are expected to push the median price of homes down about 2.5% by next year — quite the opposite of the 19.5% jump we’ve been experiencing over the past year.
So, this means if you wait to sell your home until closer to the end of the year, you won’t be able to list it for quite as much.
It Means the Market May Become Less Competitive
As interest rates rise, the market is slated to become less competitive by the end of the year to early 2023. This means that you won’t be seeing as many above-asking price offers, all-cash offers, and bidding wars. Less competition will allow the market to settle from the catastrophic and chaotic process that it’s now experiencing. But, less competition isn’t all bad news. It means you’ll be able to find a new home a lot easier — and cheaper — than current conditions are allowing for, making your move overall less stressful.
It Means Slower Price Growth
It’s no secret that home price growth has hit astronomical levels over the past two years. This surge was driven by historically low mortgage rates and the pandemic-spurred change in buyer mindset — buyers suddenly wanted more space and different scenery. Now that these two trends will likely be history, price growth will start to taper off. Freddie Mac is forecasting that home prices will rise only 2% for most of 2022. So, as prices grow more slowly, you likely won’t be able to list your home for an outlandish price (and get a full-price offer) anymore.
Expect a Spring in Demand
With spring just around the corner and rates still relatively low, homeowners should expect a busy spring selling season. Spring is usually one of the busiest times to sell a home, and you can expect the spring 2022 selling season to look more normal than the past two years. This spring's number of homes for sale is expected to rise compared to last year as the market attempts to recalibrate and balance itself after a wild pandemic-induced ride.
If you’re looking to sell your home this spring, now is the time to get started on any maintenance or upgrades because supply chain issues and labor shortages — and now potentially the conflict in Ukraine — means that it’s taking longer than ever for building materials, appliances, and furniture to be made, shipped, and delivered. So do yourself a favor and get out ahead of it, so you’re not cramming last minute to get your home sale-ready.
We Can Help
If you’d like to learn more about selling your home or have any mortgage rate-related questions, please feel free to reach out to us. We are happy to assist you in any way we can.