January 24, 2022 at 9:52am | Mac Rogers
Mortgage interest rates have just SKYROCKETED! Will housing finally come crashing down? Is this the beginning of the end for the housing market?

The beginning of this week was not good for prospective home buyers. Mortgage rates on average is above 3.5% (actually closer to 4%) on the 30 year fixed.

These jumps in mortgage rates are absolutely scary because the thought was originally we are going to be slowly go up and by the end of 2022 we could be somewhere between 3.5% to 3.75%. We are not even in the middle of January and we are already close to 4%! Son of a b*&^%#!

The jump was because the FEDs announced it would offload mortgage-backed bonds from its balance sheet sooner than expected. So instead of the that slow rate increase everyone was expecting we just catapulted up. And now people are talking about possibly a 4.5% rate by the end of the year. This is not what was expected.

Mortgage rates haven't been this high since the start of the pandemic. During that time mortgage rates have been hitting historic lows. And some say that this further helped fuel the demand for housing. And we all the the story behind this. Plenty of demand but not enough houses to sell.
This higher interest rates could signal the the end of this hot housing market as buyers will start getting hit in affordability. When you go from 3% to 3.25% to close to 4% in less than a week that's a lot!

The housing market predictions that are out there is for us to be up in the low teens, around 8% by the end of 2022 and those numbers were already revised up but that was before the FEDs signaled that they were going to taper faster. I feel like the next set of forecast would get revised downward.

So what should you be doing moving forward? My main advise has always been buy and sell when you need to and not time the market. But just know what to expect so that you won't be disappointed.

For buyers, if you are thinking that this market will turn into a buyers market, you will surely be disappointed. While we might see a slight bump in inventory and a slight decrease in demand, the reality is that we are no where near meeting that demand for housing. So it will be less competition but there will still be competition. More inventory but still not enough to turn the tide.

For sellers, can you just put lipstick on a pig and your off to the races? Absolutely not. You have missed the boat on that. Gone are the days of just putting a sign on your lawn and not caring about how the house looks like because you have 20 buyers lined up falling all over themselves to buy your house.

While a crash is still unlikely, I think there's starting to be a glimpse or a slight possibility of home prices actually would start to retreat. No one expected the FEDs to act this aggressively and if they continue on this path, those 5% or 6% mortgage rates could just be around the corner. That is almost double of where we were last year and no one was saying that this was possible just a couple of weeks ago.

The housing market moves fast and all these outlook are still rosy but with everyone getting jittery, one event could send us in the other direction. So if you are ready, make your move now. Don't time the market. No one gets it right.

Mac Rogers
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Mac Rogers is not a tax accountant or an attorney or financial adviser. Therefore, the information in these videos shall not be relied upon as tax, legal, or financial advice from a qualified perspective. If you need such advice, please contact a qualified tax accountant, attorney, or financial adviser. We have taken reasonable steps to check that the information in this video is accurate but we cannot represent that it is free from errors. You expressly agree not to rely upon any information contained in this video - it is for entertainment purposes only.

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