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Where are interest rates going? What does the 2022 Bay Area housing market hold for buyers and sellers? Interest rates are only part of the story.
Using interest rate hikes as an inflation fighting playbook can be tough on housing markets, where spiking mortgage rates can quickly price out homebuyers.
Though higher mortgage rates put downward pressure on the housing market, it doesn’t mean home prices are about to crash. In fact, every major real estate firm still predicts home prices will climb further this year.
CoreLogic put housing markets into one of five categories based on the likelihood that home prices in that particular market are going to fall over the coming 12 months.
Among the 392 regional housing markets it measured, 86% were in the “very low” or “low” likelihood of a price decline. It put 10% of markets into the “medium” grouping and 1% in the “high” grouping. Meanwhile, CoreLogic places only 2% of markets into the “elevated” group. The markets in the elevated grouping—the highest odds of a price correction—include Hartford; Kalamazoo; Lewiston, Maine; Mount Vernon, Wash.; Muskegon, Mich.; Olympia, Wash.; Salem, Ore.; and Honolulu.
Even in the face of soaring mortgage rates, CoreLogic still thinks the chances of prices declining in 2022 are low due to the mismatch between inventory and strong buyer demand. That’s also reflected in its national forecast which over the coming 12 months is predicted U.S. home prices are poised to rise 5%- far less than the 19.8% jump posted over the past 12 months, but it’s hardly the relief priced-out buyers are seeking.
As for the Bay Area? The bottom line is that odds of regional home prices dropping over the coming year are low for most counties, and homes are considered UNDER valued based on demand and lack of inventory. Only North Bay counties values were normal based on their survey.