Mortgage rates continued to climb in the week ending April 14, 2022. The most recent data released by mortgage buyer Freddie Mac reports that the average rate for a 30-year fixed mortgage made its way up to 5.0% on Thursday.
What do Rising Mortgage Rates Mean for the Northern Virginia Market?
In the week ending April 7, 2022, mortgage rates were reported at 4.72%. This week’s increase to 5% territory has not been seen in over a decade. In the last five weeks, mortgage rates have climbed 1.24 percentage points and are 1.89 percentage points higher than the end of 2021. Current average rates are showing the most rapid increase since 1994.
With Northern Virginia’s median home price climbing 9% to $650,000 compared to last year, a limited supply of available homes for sale, and inflation at a 40-year high, homeownership is looking very different than it was just one year ago. The question many Northern Virginians are asking is, how much longer will it look like this?
Northern Virginia’s housing inventory has dropped 21.8% since March of 2021. And although with high demand and low supply we are still facing elevated home prices, sellers are gradually lowering list prices. Many experts predict price increases will occur slower due to higher interest rates.
Industry Predictions
America’s frenetic housing market has become unattainable for many buyers, especially first-time homebuyers. What effect will rising interest rates have on the market?
Senior economist for the National Association of Realtors (NAR), Nadia Evangelou, forecasts a slower but continual rise through 2022. “I don’t expect to see a repeat of last year’s double-digit price increases. Home price gains will slow down, mainly due to rising mortgage rates and more homes entering the market later this year,” states Evangelou.
In late March of 2022, Sean Casey, Senior Vice President and regional sales manager of Angel Oak Home Loans, said, “If mortgage rates settle in above the 5% range, and we have a 20%-plus pullback in the financial markets, that could cause a drag on home appreciation. This would result in borrowers having less purchasing power, which could cool demand for homes.”
The Northern Virginia Market
Recently, Northern Virginia sellers have been seeing showings in much smaller numbers; they are still receiving their asking price, but with fewer offers.
The Northern Virginia housing market is still strong and will remain strong throughout the year, mainly due to our tight inventory. If you are considering selling, this is the time to leap before interest rates climb further. Sensibly priced houses in good condition are still in high demand for those looking to buy a home, but without quite the bidding wars we experienced in the last two years.
Glass House Real Estate has been serving Northern Virginia sellers and buyers since 2010. When it comes to negotiating and getting a deal done with a team of trusted professionals who successfully sell five times the number of homes as the average agent, we are ready to help.
