Saturday, December 18, 2021 / by Scott Meadows
Today's homebuying power may be affected should interest rates increase in 2022
To better understand what it all means for you and your homebuying power, you have to look closely at the latest news coming from the Federal Reserve. In mid-December 2021, the Fed put out the news it plans to speed up the pace of shrinking its monthly bond purchases starting in January 2022.
Because this means essentially doubling the pace that was previously announced by the Fed, instead of ceasing buying bonds by June 2022, that’s probably going to happen much sooner. It could actually happen by March 2022. That’s significant because it could drastically affect homebuyers in the near future. We’ve benefited from extremely low mortgage rates in recent time, but that may not last for much longer.
The new year is likely to bring about some changes. The majority of experts are predicting higher mortgage rates for 2022. If you look back through history, rates are likely to still stay on the lower end of the scale. However, trends are already showing those rates are going higher. In other words, now is the time to act before rates get even higher than they are right now.
Several published reports are already pointing to signals we could be in for three rate increases over the course of 2022. What that means for people interested in buying a new home in Southwest Florida or pretty much anywhere else in the country is that you’ll be looking a higher mortgage rates in the new year. Here’s where you need to take a good look at what kind of mortgage you currently have, or what type of mortgage you’re considering getting in 2022 for that new home you hope to purchase.
If you have a fixed-rate mortgage already on your existing home, a rate hike, or even multiple rate hikes, won’t make much of a difference. If you’re thinking about financing a new home or even refinancing your current home, however, you probably don’t want to wait too long to make it happen. If you’re looking for a good deal, the clock is certainly ticking. There’s obviously not a 100-percent change that mortgage rates will indeed climb higher in 2022. However, you need to judge for yourself if it’s worth the gamble if they do.
There are a couple of reasons why you may want to follow the potential for rate hikes closely in 2022, or even just over the next few months or six months. Take, for example, home equity. If you’ve achieved home equity, your home is now worth more than what’s left on your mortgage. If you ever wanted to use that to your advantage with, say, something like a home equity line of credit, you may be in for a surprise when rates go up. That’s just one consideration for homeowners and homebuyers.
First time homebuyers pay close attention if you're on a budget
Rising rates could also seriously impact first-time homebuyers who are already dealing with the challenges of a limited number of homes to choose from on the market, the potential for rates to go up and the disadvantage of high home prices. Suddenly, the affordability could go down in certain places across the nation, even those that are considered relatively affordable by today’s standards.
Obviously, homes that sit in certain areas and regions tend to hold their value better than others. Homes in attractive neighborhoods and communities are often at the top of the list for potential homebuyers. The particulars vary by homebuyer, depending on whether they want an amenity-rich community, a home with plenty of privacy or a highly coveted home or property with views stretching out over the sand and water.
Tomorrow’s Home Values in Florida
Today’s home values may not be what we will still see in the coming months or over the next year. In fact, already home values are projected to go up in 2022 in Southwest Florida. That’s something to really keep tabs on if you’re considering buying a new property in the coming year. Southwest Florida has so many great residential properties to choose from, it really just depends on what type of real estate you’re searching for and how ready you are to sign on the dotted line. A rate hike, or the potential for multiple rate hikes in the near future could truly impact your homebuying experience. That’s something to expect whether you’re searching in Southwest Florida or you’re taking your home search to other parts of the nation.
As for this area of the country, though, you’ll find a seemingly endless supply of different homes and communities to choose from. This part of Florida is filled with a large number of low-rise condos, mid-rise condos and high-rise condos. The area also has quite a few coach homes, carriage homes, and some detached and attached villas. Of course, there really are some stunning single-family homes for buyers to choose from in this part of the state, too. Those homes come in all sizes, depending on whether you need a smaller amount of space, or you’re searching for a grand new home with plenty of room for entertaining.
Home values are increasing daily and are projected to continue through 2022
Again, Southwest Florida home values are likely going up in 2022. If you’re in the market for a single-family home, you’ll want to really start thinking about what kind of home you want so you can start narrowing down all the potential options out there. If you’re looking for a waterfront property, there are obviously quite a few different options to consider. But what kind of waterfront property? Did you want to live in a place with peaceful lake views or did you want the kind of home that’s ideal for a boating lifestyle?
If you want a home that’s right by the sand and water, that’s another consideration. Of course, Southwest Florida is also filled with other opportunities for outdoor recreation, with dozens of golf courses at home in the area. Some homes in Southwest Florida sit close to area golf courses and some sit right alongside the golf course itself. It really just depends on what type of home you want. You also need to narrow down whether you want to live closer to some of the major attractions of a city, or you enjoy the laid-back atmosphere of living just steps from the closest beach.
Luckily, you don’t have to sacrifice when it comes to buying a home in Southwest Florida. There are so many different types of homes and residential properties to choose from, it’s likely you’ll find just the right one to fit your needs and your lifestyle. A real estate expert can do some of the work for you by helping narrow down your search to certain areas within Southwest Florida. Because you now know you probably want to start making progress in the home search, this can only help you in the long run.
Potential homebuyers in 2022 really need to take notice, because when interest rates rise, it means you may find that even though you’re qualified to buy a certain home or some real estate today, you may not be qualified to purchase the very same home or real estate once interest rates change. In other words, you could lose out on that home or real estate because of rising rates. Again, that’s a gamble you may be fine with, but if it means potentially losing out, are you willing to take the risk?
Real Estate investors set their sites on future rental properties and the best rental markets
With higher interest rates it may mean more people start looking at rental properties. If they can no longer qualify for mortgages, they may be more likely to rent than buy. When the Fed gives a boost to interest rates, it also increases the cost of borrowing. In this situation, it’s now more expensive for potential new homebuyers to take out a loan. On the flip side, when the Fed makes a rate cut, interest rates go down.
Again, we’ve benefited from extremely low rates for a while now, but it certainly can’t last forever. Rate hikes are expected in the future. As history shows us, rising rates usually mean the economy is strengthening. Of course, those rate fluctuations definitely affect homebuyers in terms of their home mortgage. It’s just something we’ll have to watch and see in the future, especially over the next year or so.
If it happens, it seems the first rate hikes will likely come sometime in the first half of 2022. A few months ago, the projection was for the Fed to just make one rate hike. Now, the projection is for three short-term rate hikes. What we could see is borrowing costs start rising in the near future. While it would certainly be nice if low rates would stick around forever, the Fed likely doesn’t want to take too long to increase rates.
While several published reports are focusing on the three projected interest rate increases for 2022, some are reporting there could be even more in 2023 and 2024. There’s a lot we’ll have to keep an eye on in 2022, but there’s also a lot of uncertainty about what’s exactly going to happen with interest rates, and just how fast it’s going to happen. Interest rates 2022 are top of mind for many prospective homebuyers, and current homeowners wanting to move up.
With supply shortages across the nation it’s not just Florida, supply and demand remain strong…
With supply shortages throughout the U.S. it’s not just Southwest Florida that’s likely in for higher home values as we begin the new year. Housing costs across the nation have been on the rise for several months now. For all of the reasons mentioned, you’ll want to act fast if you’re considering buying a new home or real estate in Southwest Florida. You certainly don’t want to lose out on the property you want because rising rates and prices now make that very same property unattainable. A well-priced home on the market won’t last long, no matter what interest rates are doing. Finding the right property to fit your needs and lifestyle can be a process, so you don’t want the perfect home or property to slip through your fingertips.
It’s time to let someone with knowledge of the current real estate market in Southwest Florida help you navigate the many homes and communities with properties on the market, and those with the potential for new properties to hit the market soon. A well-trained expert in Southwest Florida real estate knows the ins and outs of the homebuying process. Lean on us to help you find the home you want before the potential for rising interest rates make it unattainable.
There are so many fantastic homes, communities and neighborhoods spread across Southwest Florida. Whether you’re looking for a golf course community or a waterfront community, there are likely several options for you to choose from right now. There are cozy homes with just the right amount of space for couples and empty-nesters, plus there are some great retirement homes and second homes for buyers to choose from in this part of Florida.
If you’re searching for a family-friendly home and community with plenty of room to spread out, we can help you find it. There are also some grand estates on the market right now for those less concerned with sticking to a budget. No matter your needs and desires, when it comes to finding a fantastic home or property in Southwest Florida, let us help you locate just the right option to fit your needs and your budget.