After witnessing a whirlwind of a housing market over the last 18-24 months, you may be wondering what 2022 and 2023 will look like in terms of both mortgage interest rates and home inventory. MLIVE Director of Brand Strategy Eric Hultgren recently sat down with Eastbrook Homes Preferred Lender Joe Sambaer, VP and Senior Mortgage Banker at Dart Bank, to discuss strategy and housing financial forecasts. Join us as we break down the current housing market and professional predictions for the future. 

Mortgage Interest Rates

COVID brought many families and employees back to their homes for work, school, and social distancing. At first, all business stopped as we headed indoors to wait out what we thought was a short-term situation. Mortgage rates declined drastically and economists everywhere held their breath as we globally waited to see how the pandemic would affect our local, national, and worldwide finances. 

As we all observed, once state legislators developed guidelines and the collective population began to realize pandemic recovery might take longer than a few months, the housing market absolutely exploded. Lenders across Michigan and the country experienced a huge refinance and purchase boom, spurred on by low interest rates and widespread desire to improve the surroundings while isolating. Home inventory was low, the demand for homes was high, and to the surprise of a few economists, both refinancing and mortgage loan applications remained high for nearly 18 months.

Today, homebuyers continue to find themselves competing in an unrelenting, low-inventory sellers’ market – but with one big difference: mortgage rates are climbing. National inflation issues led to federal rate changes and a decrease in mortgage-backed securities purchasing at the start of the year. This trickled down to higher interest rates at national and local bank levels, impacting both new home mortgage applications and refinancing requests. 

January 2022 saw mortgage interest rates in the mid-3 %’s, averaging just over 3.5% for 30-year fixed-rate mortgage loans. The end of May saw the average interest rates reach 5.27%. Refinance applications are down 50% and homebuyers are beginning to wonder what the rest of the year will look like.    

Market Predictions

Watching mortgage rates rise a full point in 2 months is intimidating, but directly connected to the state of our local economy. Economists are unsure how our country’s inflation will continue to impact mortgage rates for the remainder of the year, but nearly everyone agrees the demand for affordable quality housing is here to stay. 

With continued mortgage rate rises potentially on the horizon and no change in housing demands, predictions that 2022’s housing market will soften are quickly falling by the wayside. Economists and lenders do believe an overall market slowdown is expected in 2023, but until then, lenders are advising homebuyers prepare for another year of low supply, high demand, and stiff housing competition.   

Why Choose New Construction?

Purchasing an existing home in today’s housing market can be incredibly frustrating. Most homebuyers spend weeks searching for the perfect home, just to be thrown into extremely competitive negotiations filled with multiple bids and offers. When faced with low inventory and an even lower chance of outbidding your competitors, building a new home is an ideal way to get the space you’re looking for at the price, quality, and location you want.

New home construction allows homeowners to control more of the homebuilding process, from pricing and design to timing and community location. You’re not going to run into multiple offers with a customizable new home build; the inventory is quite literally built for you. No more weekends spent driving from open house to open house; a new home build provides everything you want and need at a budget you control.

New home builds do sometimes incur timeline setbacks due to supply chain issues; avoid delays by building your new home with an experienced builder like Eastbrook Homes. We’re well-versed in working around supply chain setbacks and provide easy solutions to keep your home build on track. With our Eastbrook Guarantee, you’ll never need to worry about supply cost increases and can rest easy knowing your home will stay within budget from blueprints to moving day. Interested in learning more about Eastbrook’s West Michigan and Greater Lansing area communities, custom homes, and building process? Connect with us here and let’s get started!