Are you on the hunt for your first or next home? Are you wondering if selling your home is still a wise choice in this swift-changing environment? Could rising interest rates and a possible recession impact your decision? Whether you’re a buyer or a seller, here’s what you need to know about the 2022 real estate market.
How the Pandemic Affected the 2022 Real Estate Market
When the pandemic hit in March 2020, the housing market took an immediate, severe dip. But by the summer, we saw an aggressive rebound as stay-at-home orders were lifted and work-from-home became something of a new norm. Suddenly, people who were renting in expensive cities to be close to the office could now purchase a home in a further, more affordable location because they could continue to telecommute. But because there were still fewer homes for sale than demand, it created a competitive market for buyers and a swift uptick in home prices that has continued to see double-digit increases more than two years later.
Home prices in Southern California have continued to rise with a median price that increased by nearly 12% year over year.* But changes appear to be on the near horizon. The Federal Open Market Committee has increased interest rates multiple times this year in order to combat rising inflation. The average national rate for a 30-year fixed mortgage has risen more than 2% year over year. In addition, pending and closed sales took a double-digit decline year over year for the first time in three months in May 2022. More unsold inventory combined with higher interest rates could mean a flattening of prices in the near future.
Talk of a recession has gotten louder recently, but economic experts say it’ll be mild compared to the housing crisis of 2008. Lenders significantly tightened restrictions after the housing bubble burst and they never looked back. As a result, we most likely won’t witness an earth-shattering decline in home values, but we may see fewer homes selling for significantly over the asking price in the months ahead - a small bright spot for home seekers.
It’s Still a Seller’s Market
If you’re an Orange County homeowner interested in selling, it’s still a great time. Nearly 70% of homes in California sold in May 2022* went for more than the asking price. However, the tide may be turning, so if you’re thinking of getting the most you can out of a sale, it’s wise to act quickly. Alternatively, if you aren’t ready to sell, you could always take advantage of the increased equity in your home and reinvest it by making home improvements or paying off higher-rate debt.
For buyers, while the market is still extremely competitive in most pockets of Southern California, there seems to be better news on the horizon. Rest assured, even if you buy now over the asking price, you shouldn’t worry too much about losing value in the years to come as prices flatten. Just keep in mind that the same house will now cost you a bit more due to higher interest rates. Orange County’s Credit Union offers a free Total Cost Analysis that includes a Cost of Waiting analysis to help you determine the right timing.
Orange County’s Credit Union is Here to Help With All Your Real Estate Needs
Whether you’re selling, buying, or simply looking for a competitive rate on a home loan, Orange County’s Credit Union has you covered. Through our Home Connections Rebate Program, you can receive a 20% rebate on your agent’s commission.¹ Plus, we cap the listing fee at 1.5%.² We’ll introduce you to a local participating real estate agent who can help you buy or sell your home, while we help you with the financing. You’ll get the expertise you need, and save thousands of dollars on fees.
Reach out to us to learn more.
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¹Rebate is awarded by HomeSmart Evergreen Realty to buyers who select and use a real estate agent in the Home Rewards network. Rebate is 20% for purchase only of a residential property. Payment is credited to your benefit at the close of transaction. Using Orange County’s Credit Union for a mortgage loan is not a requirement to earn the rebate. All rebates are subject to limitations, lender guidelines, state laws and other requirements. Certain properties may not be eligible for rebates. Please consult a qualified tax professional for advice on tax implications from receiving a rebate. HomeSmart Evergreen Realty is not affiliated with Orange County’s Credit Union.
²Excludes commission owed to buyer's agent.