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Interest Rates are Rising | Will Housing Market Soon Correct?

Posted by Mike Askins on Monday, January 10th, 2022 at 2:57pm.

Will 2022 Be The Year The U.S. Housing Market Corrects?

Of course, I don't hold tomorrow's economic headlines in my hands, but on a historical basis, the U.S economy is long overdue for a correction, and who knows what this so-called RESET will do. Then the 2020 pandemic triggered a pronounced wave of extraordinary inflation and an unprecedented dislocation of the world's critical supply chains that still haunt our markets.

Huge government bailouts and emergency spending soon followed adding helicopter money to an economy whose factories were ordered to curtail operations and that triggered today's crisis of inflation caused by too much currency chasing too few goods. How come our so-called experts suddenly seem to be anything but experts?

Will Sentiment Change from Easy to a Tighter Money Supply? Will Housing Market Soon Freeze-Out?

Last fall, while still in the depths of a COVID emergency, the Fed began signaling they would start raising borrowing rates and stop bond purchases. I am not 100% convinced this will work without serious repercussions. Still, the market bias on mortgage rates is up a noticeable half to three-quarters of a point and rising since that announcement, but the Fed has yet to act on raising its benchmark interest rate officially as it watches financial markets speculate higher based on Fed-talk.

Just recently, the Fed has signaled an even more aggressive posture with rate hikes, but will they act officially, and if so, just how high will rates need to go to effectively stop and maybe reverse some of the damage caused by inflation? Keep in mind during the 1970s and early 80s shock, interest rates hit 20%, home prices declined for a period, and home sizes became smaller to accommodate the sizeable monthly interest payments going to the banks. Once markets stabilized, rates fell, resuming a measured annual inflation rate, and home prices once again began to gradually rise as a result.

Historically, rising interest rates trigger recessions, which is bad for employment, stocks, businesses, housing, government debt repayment, and in 2022, a much-needed supply chain recovery. I am not sure the Fed will have the stomach for the economic conundrum high rates can trigger, not to mention a probable government default. Still, with so many unknowns just ahead, selling now might be your last opportunity to sell at what may be a market top.

Whether 2022 turns out to be the quiet before the storm, or another step on the inflation ladder of rising home values. January MLS data shows that home prices are still rising (find out your home's value), supply has fallen, and demand is white-hot. At this moment in time, one just needs to be aware that rising rates could soften demand and home values as inventories increase.

Get ahead of the 2022 Real Estate MarketThe key concern for sellers is this; once the housing market enters a correction, no amount of Realtor "marketing," open-houses, or yesterday's COMP Reports will help sellers capture yesterday's prices. 

Get Traditional Full-Service Listing Experience @ REDUCED Commission Rates! YOU Retain the MOST Equity Possible When You SELL With Us!

In 2021 ARG helped our listing clients earn many tens of thousands of dollars over our MLS asking price. Early 2022 continues this trend, but with interest rates set to rise during the year, markets will come under increasing pricing pressures. It's never easy to sell, it is a lot of work, but if you're looking to capitalize on today's higher prices, listing and selling sooner, stands to help you capture top dollar.

Earn the Most Money Possible While Paying a Lower Commission Rate If you're interested in selling while conditions remain favorable for sellers? Call Mike at 214-727-3686 for additional information or fill out the contact form below and we'll contact you.  

Low Cost Traditional Listing and Even LOWER COST NEW HOME MOVE-UPS!


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Mike Askins

Mike Askins, Realtor, Owner ARG
Got questions for Realtor Mike? Call me at 214-727-3686 (mobile)

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