Investment banking giant predicts home prices will rise another 16% by the end of 2022

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Talk about good news for sellers.

There’s a reason buyers today have a hard time buying homes. Home prices have soared to almost unbelievable levels this year, putting buyers at a huge disadvantage.

In July, home prices rose 19.7% from the previous July, according to the S&P CoreLogic Case-Shiller Index. And an investment bank is convinced that there is still room for growth.

House prices could rise further

Goldman Sachs has bad news for future home buyers. He expects house prices to continue to rise, up another 16% by the end of 2022.

Why does the rise continue? It could come down to low inventory.

When there is not enough supply of a given item, prices can skyrocket. Such is the case in the housing market today. Currently, there are not enough homes for sale to meet buyer demand. And stocks could easily remain sluggish through 2022, driving home prices to continue to rise.

One of the main reasons housing inventory is so limited is that many sellers have delayed listing their homes, likely due to the pandemic and the general uncertainty it has caused. The pandemic seems far from over, and sadly, there’s reason to believe that COVID-19 will be with us well into 2022. In light of that, we may not see many more homes coming to the market, especially at the beginning of the year. , as registrations tend to be slow during the winter months outside of pandemic times.

Are low mortgage rates helping?

House prices may have reached record highs, but one silver lining is that mortgage rates are currently near record highs, where they have been for much of the year.

Homebuyers with good credit could get affordable home loans that can help offset rising home prices. Plus, mortgage rates are expected to stay low through 2022, so even if home prices continue to climb, buyers probably won’t be totally out of luck.

Still, there are risks to buying a home at an ultra-high price, and those risks go beyond struggling to meet mortgage payments. Buyers who pay for homes today risk losing out if they have to sell those homes in the short term. And if the pandemic has taught us anything, it’s that circumstances can change overnight. That’s why today’s buyers need to proceed with caution, even if they can afford the homes they’re paying too much for.

Once housing supply catches up with buyer demand, home prices are expected to decline. But when it will happen, anyone can guess.

In addition to rising property prices, Goldman Sachs also believes rental prices will continue to soar. Housing is already the most important monthly expense for the typical American. Unfortunately, in the short term, affording a home – whether buying or renting – could prove difficult until the residential real estate market cools.

A Historic Opportunity to Save Potentially Thousands of Dollars on Your Mortgage

Chances are interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.

Ascent’s in-house mortgage expert recommends this company find a low rate – and in fact, he’s used them himself to refi (twice!). Click here to learn more and see your rate. While this does not influence our product opinions, we do receive compensation from partners whose offers appear here. We are by your side, always. See The Ascent’s full announcer disclosure here.

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