The Future Outlook on Residential Property Values and Lending Costs

If you're considering relocating this year, two key housing market factors are likely on your mind: home prices and mortgage rates. You're curious about what will happen next and whether it's better to move now or wait.

The best you can do is make an informed decision based on the latest available data. Here’s what experts are saying about home prices and mortgage rates.

1. What’s Next for Home Prices?

A dependable source for home price forecasts is the Home Price Expectations Survey by Fannie Mae, which gathers insights from over a hundred economists, real estate experts, and market strategists.

The latest release indicates that experts anticipate home prices will keep increasing at least through 2028 (refer to the graph below):

Although the precise rate of appreciation fluctuates on a yearly basis, this survey indicates that we can expect to witness a sustained rise in prices over the next five years at minimum, albeit at a more moderate and historically typical pace, rather than a precipitous decline.

What does this mean for your move? If you buy now, your home will likely increase in value, allowing you to gain equity over time. However, if you wait and prices continue to rise, homes will only become more expensive later on.

2. When Will Mortgage Rates Come Down?

This is the million-dollar question in the industry, and it doesn't have a straightforward answer. Numerous factors are contributing to the volatile mortgage rate environment. Odeta Kushi, Deputy Chief Economist at First American, explains:

"Each month brings new inflation and labor data that can affect the direction of mortgage rates. Factors such as ongoing inflation deceleration, a slowing economy, and geopolitical uncertainty can lead to lower mortgage rates. Conversely, data indicating potential inflation risks might result in higher rates."

What happens next will depend on how these factors evolve. Experts are optimistic that rates will decrease later this year, but they acknowledge that shifting economic indicators will continue to influence outcomes. As a CNET article states:

"While there's a possibility that mortgage rates might decrease later this year, housing market forecasts are subject to frequent adjustments based on economic data, geopolitical events, and other factors."

If you're prepared, eager, and financially capable of purchasing a home at this moment, collaborate with a reliable real estate advisor to assess your choices and determine the best course of action for you.

Bottom Line

Reach out to a dependable real estate agent to ensure you're equipped with the most up-to-date information regarding home prices and mortgage rate forecasts. Working together, you'll review insights from experts, empowering you to make a well-informed decision regarding your move.