Housing Market Trends November 2022 | Residential Snapshot

Last Updated on October 25, 2022 by Luke Feldbrugge

Welcome to the Housing Market Trends November 2022 monthly update from Homes for Heroes. This report focuses on the residential real estate housing market. We listen to the experts and boil down what they have to say to assist you, our heroes, with decision making regarding buying a home, selling your home, or refinancing your mortgage.

Housing Market Trends for November: Interest rates

In the past we’ve been talking about how the real estate markets are returning to normal, but normal isn’t that much fun. And the folks at the Federal Reserve aren’t helping things much for first-time buyers. They keep increasing the interest rates as they try to battle inflation, and that is quickly driving higher interest rates on mortgages. How fast? Faster than we’ve seen them in a long time.

Last summer we were citing a lot of predictions and experts that said the interest rates would stop increasing and level out in the mid 5.5% range. They were wrong, and so we were wrong too. Our feeling is that if you want to go into the business of making educated predictions, you better be prepared to be wrong…and admit it.

Now we are all looking at 7% interest rates with predictions that it will keep going up for the foreseeable future. How far and for how long? It’s anybody’s guess at this point. Sometimes economic trends favor buyers over sellers, or the other way around, but fast rising interest rates (and higher mortgage rates) aren’t good for either side.

Right now there are prospective buyers who are still on the hunt, still in the market for a new home, still looking to sell their current home, but some first-time homebuyers have moved to the sidelines. We wouldn’t blame anyone for putting their plans on hold with the acceleration of interest rate increases. But remember, the real estate market is usually the first to emerge from a recession and rebound.

Either way, let us know. There’s a comment section on this blog at the bottom of the page, so let us know: 1) I’m still in the market or 2) I’m on the sidelines until the rates stabilize.

One key point for potential buyers: Having a lender you can trust will be vital. They can help you find the right mortgage for your circumstances. That is one way Homes for Heroes can help. We connect community heroes–teachers, healthcare professionals, law enforcement personnel, military and first responders–with private lenders and mortgage brokers, as well as real estate agents, that have committed to serving heroes like you. Let us connect you.

Home Price Appreciation versus Depreciation

The big debate is whether housing prices will go up or down–appreciate or depreciate–in the future. The experts are mixed on their predictions. As you can see, a lot of them are still optimistic, while Ivy Zelman is not.

If you read through the back-and-forth of the experts, it can make your head spin. The facts are:

• Showings are down
• Total number of homes (housing inventory) available is up
• Home Builders have slowed new home construction in recent months

When you do a simple housing “supply and demand” observation of what’s going on, home prices are probably going to come down in some places (especially in locations where the homes hit all time high prices). Overall, however, for the next few years, home price growth is predicted to continue to increase because it’s still an environment of tight supply.

If you are a seller, it looks like it’s best to err on the side of optimism and strong sales in the next few years.

Housing Market Trends November: Equity

If there’s good news in the real estate world, it’s equity. There’s a whole lot of equity going on because over the past few years, as the prices on houses rose, so too did the equity. Right now homeowners are sitting on more equity than ever, with the average household equity hitting its highest level of $320,000. That’s a 2020 number, and recent research shows that it’s gone up by and additional $60,000 in the past year –a record high.

That’s a great wealth cushion for homeowners, but it’s more than that. It also drives housing demand across the United States.

“Record equity continues to provide fuel for housing demand, particularly if households are relocating to more affordable areas. – Selma Hepp, Interim Lead of the Office of the Chief Economist, CoreLogic

The movement away from cities, due to the remote work revolution, is already being seen as people flee to single-family homes in the suburbs. There are predictions that work from home will also drive many employees to relocate to rural areas, but those are still just predictions.

Whatever the case, equity is the long game in home sales. The shift away from the short-term thinking of the real estate roller coaster of 2019-2022 is bringing folks back to one of the traditional reasons people buy a home: to have a place to live while building equity.

One of the drivers that can get buyers in a long-term mentality is the current escalation of rents. Renting is more expensive than ever, and when comparing renting versus owning in this kind of market, it’s an easy case to make. Few people are comfortable paying rent every month with almost nothing to show for it. And if you want to go beyond the financials of owning a house over renting, there is also the stability, security and general good feelings that come with living in your own home.

Generational Observation

On the topic of long-term thinking, the Millennial Generation was trained to do that very young. They spent much of their youth preparing to get into the “right” college through grades, extracurriculars and volunteer work. Ask any admission counselor from a college and they will tell you that the Millennials are very good long-term planners. Many if not most came into college with 5- and 10-year post graduation plans, which was unique to this generation. Appealing to first-time home buyers who have this orientation should make it easy to convince them that now is a good time to buy a home. In addition to that, many are feeling a lot of debt relief from the recent decision to cancel student debt.

“Roughly 20 million borrowers are eligible to have their entire debt wiped out, while another roughly 21 million borrowers are eligible to have part of their debt erased.” –Committee for a Responsible Federal Budget

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