Housing And Mortgage Market Forecast For First-Time Homebuyers 2022

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover the housing and mortgage market forecast for first-time homebuyers in 2022.  The Housing and Mortgage Market Forecast was very strong for first-time homebuyers. The strong housing market is expected to continue through 2022. The economy was booming despite skyrocketing inflation data under the Joe Biden Administration. Unemployment numbers are at under 5.0% despite the coronavirus vaccine mandate from the White House. Housing prices have been increasing year after year with no signs of any slowdown. However, home prices are showing signs of stabilizing where it may turn into a buyer’s market.

Rising Inflation and Skyrocketing Home Prices

Due to rising home prices, HUD and the FHFA have increased FHA and Conforming Loan Limits for the past five years. HUD increased 2022 FHA Loan Limits to $420,680. The Federal Housing Finance Agency (The FHFA) has increased 2022 conventional loan limits to $647,200. The Dow Dones Industrial Average and all other equity market indices have hit a historic high couple of weeks ago. There is a lot of talk about a stock market selloff and housing market correction due to the Democrats spending spree and incompetence of President Joe Biden and Vice President Kamala Harris.

Stock Market Volatility Causing Nervousness Among Homebuyers

A stock market selloff enters correction territory when the market drops 10% or more. The Dow hit a historic high and surpassed 36,000 points last week. Joe Biden has implemented the coronavirus vaccine mandate for companies that employ 100 plus employees. The first coronavirus death was reported in Washington State where a man in his 50’s died. Washington Governor Jay Inslee declared a state of emergency a few hours after the death of the man was reported. Uncertainty is drawing fear among home buyers. However, the coronavirus has a survival rate of 99.8%.  The good news about the coronavirus and the uncertainty is that it is plummeting mortgage rates. Fed Chairman Jerome Powell announced on Friday that the Federal Reserve Board will do everything possible to bring stability to the market. The Feds lowered interest rates to zero percent. In this article, we will discuss and cover the housing market forecast for first-time homebuyers with the skyrocketing home prices. We will also cover the benefits of buying a home and/or refinancing a home mortgage.

2022 Housing Market Forecast Versus The Plunging Stock Market

The coronavirus scare is not affecting the stock and housing markets. The definition of a market correction is when the market drops 10% or more. The Dow tanked more than 13% in 5 trading days last week, making it the worst decline since the 2008 financial crisis. The plummeting equities markets are good for mortgage rates. When the Dow and other equity markets tanks, mortgage rates plummet. This is what is happening which means homebuyers and homeowners will get lower mortgage rates. Nobody has a crystal ball, but the housing market was booming prior to this market selloff and stock market correction. If anything, many experts are anticipating a surge in mortgage applications due to the plummeting mortgage rates.

What Experts Are Predicting For Mortgage Rates 

Michael Gracz of Gustan Cho Associates said the following:

The housing market heated up after the Fed turned dovish in 2020, and in 2021 the momentum is poised to continue, according to analysts. Among the key housing market predictions for 2021: While house prices are expected to flatten, a mixture of economic growth, high employment, and low-interest rates should drive demand. Housing stocks that have pivoted to entry-level homes amid continuing rising demand from millennials are expected to do well. Gustan Cho Associates Mortgage Group is seeing momentum heading into 2021 for the housing market. The strong economy is one reason why demand will be strong. The foundation for a strong housing market is driven by employment growth, higher household income, and high consumer confidence levels. We’re also seeing the secular change to millennial households beginning to acquire their first homes. Stocks of housing companies that moved quickly to shift from building more expensive move-up properties to entry-level homes are benefiting from that secular trend.

Many baby boomers are retiring and downsizing. This is going to bring more demand for the 2022 housing market.

2022 Housing Market Forecast On Home Inventory Versus Demand

The demand for housing is boosting home values and prices. Depending on the area, home prices have been skyrocketing year after year. As mentioned earlier, HUD and the FHFA have been raising loan limits due to skyrocketing home prices. Now with the uncertainty of the stock market and the recent market selloff, mortgage rates are tumbling like never before. With low mortgage rates, the demand to purchase a new home and/or refinance their current mortgage will be higher than ever.

Michelle McCue of Gustan Cho Associates said the following:

It will offer more opportunities for some as the supply of new homes begins to offset inventory pressure that has built over the last four years, interest rates remain reasonable and home prices flatten. The broad price moderation will continue to make midsize markets in the Midwest and South attractive. Enough homes are being built to address the rapidly growing demand from millennials for entry-level housing. The construction of new homes in 2020 was largely isolated to the upper-tier of housing, and that is unlikely to ease conditions for first-time homebuyers. I do not think that qualifying for a mortgage could be easier on paper due to stabilizing prices and a relatively low-rate environment. I do not feel the Federal Reserve will be stepping in to raise rates any time soon, a move that would slow down the market. The Fed’s likely to be on the sidelines until there’s more data indicating either an economy that’s heating up or an economy weakening. It looks like they’ll be on the sidelines possibly for six to 12 months.

2022 Housing Market Forecast On Home Purchase

The 2022 Housing and Mortgage Market Forecast is stronger than ever. A home is one of the most important financial decisions most Americans will make in their lifetime. A home purchase is the largest investment most Americans will make in their lifetime. Most homebuyers will get a mortgage to purchase a home. What this means is they will need to make timely housing payments for the next 30 years. Risks factors in not being able to make their mortgage payments include if the homeowners lose their jobs, get a divorce, and/or get sick. If the homeowners stop making their mortgage payments, the lender will start foreclosure proceedings and the homeowner may lose their homes. Job stability is very important. Economic conditions affect job stability. This is why the market conditions affect the decision-making process for homebuyers. It does not seem like the current coronavirus scare has deterred potential homebuyers yet. However, as the financial markets remain volatile and the cure of the coronavirus still remains uncertain, it may affect the U.S. housing market. Fundamentally, the housing and mortgage market forecast remains strong. Mortgage rates are expected to plummet in the days and weeks to come. We do not expect any slowdown in our 2022 housing and mortgage market forecast.

Buying Versus Renting

Financial security is key when considering buying a home. The lower your debt to income ratio, the safer you are. You do not want to struggle to make monthly payments every month. Even though the lender will approve you with a high debt to income ratio, you need to consider how much home you can afford versus how much home can you qualify for. The Consumer Financial Protection Bureau (CFPB) recommends a total debt-to-income ratio below 43%.

Mike Gracz of Gustan Cho Associates is a housing market expert and has been following the 2022 housing and mortgage market forecast since last year. He said the following:

Another question to ask: Does it make more sense to rent or buy a home in 2022? A key metric to watch is the price-to-rent ratio, which is the ratio of median home prices to annualized median rent in a given location. As a general rule, ratios ranging from 1 to 15 are low, meaning it’s typically better to buy. Ratios from 16 to 20 are moderate, meaning the advantages of buying are less clear. And ratios of 21 and higher mean it is much better to rent. San Francisco has the highest ratio in the U.S. at 50.11, according to an analysis of Census data by Smart Asset. Los Angeles comes in at 38.59, New York at 36.83, and Seattle at 36.07. Houston has a more affordable ratio of 14.67, while the cheapest is Cleveland at 8.31 and Detroit at 5.35. A recent trend has been millennials moving out of city apartments to buy homes in the distant suburbs or cheaper parts of the country. Also on the checklist for buying a home: having enough money for a deposit, getting preapproved for a loan, and checking your credit score. Make sure that any potential home to buy is somewhere you are willing to live for the long term. If you have or plan to start a family, consider the quality of local schools. Also, hire a trusted real estate agent. Real estate agents can help you find a home to buy and negotiate the price. But remember, it’s ultimately your decision.

The 2022 housing and mortgage marketForecast remains stronger than ever. Even with the coronavirus scare and the stock market selloff, the housing market is expected to remain stronger than ever. Homebuyers need to understand that the economy and the overall markets are fundamentally strong. Market volatility is expected. Back during the 2008 financial crisis, the stock market dropped by 60%. The Dow Jones plummeted from 16,000 to 6,000. However, the markets recovered and we are still in a raging Bull Market. The key is not to panic during times of market volatility.