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The last two years caught many of us off guard—and not just because of the pandemic. They also ushered in the hottest housing market on record in Mammoth Lakes and nationwide, with home prices rising nationally by nearly 19% in 2021, driven primarily by low mortgage rates and a major supply shortage.1

But while some had hoped 2022 would bring a return to normalcy, the U.S. real estate market continues to boom, despite rising interest rates and decreasing affordability.

So what’s driving this persistent demand? And is there an end in sight?

Here are three factors impacting the real estate market right now. Find out how they could affect you if you’re a current homeowner or plan to buy or sell a home this year.

MORTGAGE RATES ARE RISING FASTER THAN EXPECTED

Over the past couple of years, homebuyers have faced intense competition for new homes—in part due to historically low mortgage rates that were a result of the Federal Reserve’s efforts to keep the economy afloat during the COVID-19 pandemic.

However, in response to a concerning level of inflation, the Fed is now reversing those efforts by raising the federal funds rate. And as a result, mortgage rates are rising, as well. Few experts predicted, though, that mortgage rates would go up as quickly as they have.

In January 2022, the Mortgage Bankers Association projected that rates would reach 4% by the end of this year.2 By mid-April, however, the average 30-year fixed mortgage rate had already hit 5%, up from around 3% just one year prior.3 On a $400,000 mortgage, that 2% difference could translate into an additional $461 per monthly payment.

Since then, mortgage rates have continued on an upward trend. So what impact are these rising rates having on demand? While many buyers had hoped for a cooling effect, experts warn that may not be the case.

Ali Wolf, chief economist at housing market research firm Zanda, told Fortune magazine, “Rising mortgage rates are having a counterintuitive effect on the housing market. Home shoppers are actually sprung into action in an attempt to buy a home before mortgage rates rise any higher.”4

Since inventory remains low, the resulting “race” has kept the homebuying market highly competitive–at least for now.

What does it mean for you?

While current 30-year fixed mortgage rates represent an increase over previous months, they remain well below the historical average of 8%.5 As inflation across the economy continues, the Fed is likely to raise rates further this year. Buyers should act fast to secure a good mortgage rate. We’d be happy to refer you to a lender who can help.

For sellers, speed is also of the essence. The pool of potential buyers may shrink as mortgages become more expensive. And if you plan to finance your next home, you’ll want to act quickly to secure a favorable rate for yourself. Contact us today to discuss your options.

HOME PRICES KEEP CLIMBING

History shows that higher interest rates don’t necessarily translate to lower home prices. In fact, home prices rose 5% between 1980 and 1982, a period of significantly higher mortgage rates and inflation.5

Forecasters expect that home prices will continue to go up throughout 2022, though likely at a slower pace than the 18.8% increase of the last 12 months.4 Bank of America predicts that prices will be up approximately 10% by the end of this year, while Fannie Mae estimates 11.2%.6,7

In addition to limited supply and a race to beat rising mortgage rates, home values are also climbing because of positive economic indicators, like low unemployment.8 Plus, rents are soaring–up 17% from a year ago–which is prompting more first-time homebuyers to enter the market.9 Add to that the continued popularity of remote work, and it’s easy to see why property prices continue to surge.

However, it’s not all bad news for prospective homebuyers. Economists expect that as mortgage rates rise, the rate of appreciation will continue to taper, though the effect may be gradual.

“Eventually mortgage rates will slow down home prices,” according to Ken Johnson, an economist at Florida Atlantic University interviewed by Marketwatch.10 “We should not see rapid upticks in prices as mortgage rates rise.” Forecasters agree—Fannie Mae expects price increases to slow to 4.2% in 2023.7

What does it mean for you?

While the pace of appreciation is likely to decrease next year, home prices show no signs of going down. However, current labor shortages are leading to higher salaries and better job opportunities for many workers. You may find that your income growth outpaces home prices, making homeownership more affordable for you in the future.

For homeowners, the outlook’s even brighter. You could find yourself sitting on a nice pile of equity. Contact us for a free home value assessment to find out.

INVENTORY REMAINS EXTREMELY LOW

As noted, one of the largest hurdles to homeownership is a lack of inventory. According to a February 2022 report by Realtor.com, there’s an expanding gap between household formation and home construction, which has resulted in a nationwide shortage of 5.8 million housing units.11

The origins of this shortage date back to the 2008 housing crisis, during which crashing home values led contractors to stop building new properties—a trend that has not been fully reversed.12

That decline in home construction also resulted in a decrease in the number of home building professionals, a trend that was exacerbated by job losses during the COVID-19 pandemic. Now, many builders are limited by their ability to find qualified labor.

Another major challenge is a staggering increase in the cost of materials. Pandemic-related supply chain shortages have been a significant driver, with home building material costs rising on average 20% on a year-over-year basis. The price of framing lumber alone has tripled since August 2021.13

These trends add tens of thousands of dollars to the cost of a typical home. Factors like a lack of buildable land in many areas, restrictive zoning, and a shortage of developers are also contributing to the issue.14

Most homebuying experts agree that the lack of inventory is the primary factor driving rising housing prices and unprecedented competition for homes. With available housing units near four-decade lows, the end of the current housing boom is not yet in sight.15

What does it mean for you?

Prospective buyers should be prepared to compete for a home, since low inventory can lead to multiple offers. You may also need to expand your search parameters. If you’re ready to look, we’re ready to help.

For sellers, the picture is rosier. In this strong market, your home may be worth more than you realize. Contact us to find out how much your home could sell for in today’s market.

WE’RE HERE TO GUIDE YOU

While national real estate trends can provide a “big picture” outlook, real estate is local. And as local market experts, the professionals at Destination Real Estate will guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.

If you’re considering buying or selling a home in Mammoth Lakes or the Eastern Sierra, contact us now to schedule a free consultation. We can help you assess your options and make the most of this unique real estate landscape.

Sources:

  1. Marketwatch – https://www.marketwatch.com/picks/home-price-appreciation-will-normalize-what-5-economists-and-real-estate-pros-predict-will-happen-to-home-prices-in-2022-01646940841
  2. Bankrate –
    https://www.bankrate.com/mortgages/mortgage-rate-forecast
  3. CNBC –
    https://www.cnbc.com/2022/04/16/heres-how-much-the-same-mortgage-costs-now-compared-to-last-year.html
  4. Fortune –
    https://fortune.com/2022/03/23/housing-market-interest-rate-economic-shock/
  5. National Association of Realtors –
    https://www.nar.realtor/blogs/economists-outlook/instant-reaction-mortgage-rates-april-07-2022
  6. Fortune –
    https://fortune.com/2022/03/16/home-prices-2022-2023-bank-of-america-forecast-mortgage-rates/
  7. Fortune –
    https://fortune.com/2022/03/07/what-home-prices-will-look-like-2023-fannie-mae/
  8. Fortune –
    https://fortune.com/2022/03/17/home-prices-drop-housing-markets-california-michigan-massachusetts-corelogic/
  9. CNN –
    https://www.cnn.com/2022/03/23/success/us-national-rent-february/index.html
  10. MarketWatch –
    https://www.marketwatch.com/story/home-prices-increase-at-one-of-the-fastest-rates-on-record-but-higher-mortgage-rates-should-slow-future-growth-11648559497
  11. Realtor.com –
    https://www.realtor.com/research/us-housing-supply-gap-expands/
  12. NPR –
    https://www.npr.org/2022/03/29/1089174630/housing-shortage-new-home-construction-supply-chain
  13. Investopedia –
    https://www.investopedia.com/housing-market-dips-in-early-march-2022-5222449
  14. NPR –
    https://www.npr.org/2022/03/29/1089174630/housing-shortage-new-home-construction-supply-chain
  15. Fortune –
    https://fortune.com/2022/03/14/housing-market-key-metric-inventory-zillow-bad-for-buyers/

Follow Along on Instagram

There are a few different scenarios for homeowners that are struggling to make their mortgage payments or are “underwater” on their homes (and owe more than what it’s worth)—including short sales and foreclosures. While we don’t see many of either in Mammoth Lakes, this may be helpful for those outside the area.

Read More in my blog... Link in Bio...

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Make finding your flashlights easier in a power outage by wrapping glow in the dark tape around the handle. I love simple hacks!

Saved me on more than one occasion!

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Steps to The Village at Mammoth and Canyon Lodge gondola, this totally updated Westin Monache one-bedroom condo is ready for you to enjoy or start renting out today!
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Here are a few reasons buyers should finally be feeling more optimistic. 🌟

Wondering if it’s the right time for you to buy a home? We’d be happy to talk through the specifics of your situation. Send us a DM today! 📲

#sonjasellsmammoth #destinationmammoth #mammothrealtor #mammothcabin #mammothcondo #mammothrealestate #bestagentinmammoth
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The Mammoth Lakes Ice Rink is officially open! Come join in even more winter fun! Located near the Mammoth Lakes Library.

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Happy Thanksgiving From Beautiful Mammoth Lakes CA!

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Have you watched homes on your street sell for sky-high prices in the past few years?

It’s tempting to aim high when it comes time to sell your home—but proceed with caution.

The market is adapting to rising mortgage rates, and homes simply aren’t selling as fast. Unfortunately, the longer a home is listed, the more buyers’ concerns begin to grow.

Of course, you also don’t want to sell your home for less than it’s worth.

That’s why it’s important to work with a local market expert. We know the ins and outs of the local real estate market and what buyers are willing to pay today.

The good news? If you’ve been in your home for several years, you are likely to have a sizable amount of equity. That means you stand to make a tidy profit. 🤑

Get in touch for a free home value assessment to find out what your home could sell for in today’s market!

📲 760.914.4664
📧 [email protected]

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Mammoth Lakes - Best Ski Town!
Exciting news. Mammoth Lakes has been nominated for Best Ski Town in America in the USA Today 2022 10Best Readers’ Choice travel awards. But also, Clocktower Cellar has been nominated for Best Ski Bar!

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November Market Update!

Link in Bio...

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While I am often accused of being an eternal optimist, there are some valid reasons for having a positive outlook on the current real estate market.

When you’re hearing news about home prices remaining high, and mortgage rates skyrocketing, you might wonder how a real estate agent can possibly claim it’s a great time to buy. Or, on the other hand, you read that sales prices are coming down and it’s taking longer to sell because rates have gone up, it may make you question how agents can claim that it’s a great time to sell.

You might feel like agents always seem to be constantly putting a positive spin on the current real estate market, and think they’re doing it out of self-interest. After all, they only make money if and when someone buys or sells a house, so of course they’d want people to feel like it’s always a great time to buy or sell real estate.

Link to full article in bio.
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"Sonja was so professional and wonderful to deal with. She stepped in when our original realtor bowed out after we drove 5 hours to look at real estate. She stepped in without a single hiccup and then stood by us as we negotiated the purchase price and was with us helping us get the mortgage. She was a full service realtor even doing things not normally done by a realtor. Highly recommend her."

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Curious about what they are building in town near The Stove restaurant?? A new recreation center is coming to Mammoth Lakes! For more check out my blog...

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Sonja is super excited to help her clients sell their St. Anton condo -- they are doing a 1031 exchange and will be buying in another state. The good news is they still own in Mammoth Lakes and will be around for years to come. A local full time resident is the new owner and will call this place home....just in time for the holidays! Thanks to Lauren Tracey and Sierra Escrow.

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6 2

How can you get the most money for your home in today’s market? 💰

The real estate market is cooling. But it’s still possible to score a great offer if you follow these tips:

🛠️ Make strategic repairs and improvements
🧹 Declutter and depersonalize
🛋️ Stage your home for success
🧽 Prep for each showing
💸 Price your home correctly from the start

Searching for more home seller strategies to maximize your sale price? Check out our blog post!

🔗 LINK IN BIO

#realestatetips #housingmarket #homeowner #homesellers #personalfinance #realestate #realestateagent #homesforsale #realestateinvesting #sellmyhouse #mammoth #mammothrealestate #mammothlakesrealestate #mammothcabin #mammothrealtor
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Mammoth Holiday Tip:
Morrison's is a great dinner option for the whole family. A fan favorite is the Barrumundi.

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OPEN HOUSE!
895 Canyon Blvd #34
Mammoth Lakes, CA 93546

Stop by and check out this condo right next door to Canyon Lodge!
Saturday, November 19
2 PM - 5:30 PM
Hosted by Destination Real Estate REALTOR® Danielle Bauman

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Save your empty toilet paper rolls and dryer lint for DIY fire starters. Just stuff the tubes with the lint and you've got free kindling for your grill, campfire, or fireplace.

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Check out my latest newsletter for all the Mammoth Lakes real estate updates and information!

Link in bio...

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