Boston Condos for Sale and Apartments for Rent
What do we see for mortgage rates and Boston condo prices?
The average long-term U.S. mortgage rate rose for the second straight week following six weeks of declines that had given prospective homebuyers a glimmer of hope.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate inched up to 6.48% this week from 6.42% last week. A year ago the average rate was 3.22%, less than half of the current average rate.
The average long-term rate reached a two-decade high of 7.08% in late October and again in early November as the Federal Reserve continued to crank up its key lending rate in an effort to cool the economy and tame inflation.
At its final meeting of 2022, the Federal Reserve raised its rate 0.50 percentage points, its seventh increase last year. That pushed the central bank’s key rate to a range of 4.25% to 4.5%, its highest level in 15 years. The Fed has signaled it may raise its rate another three-quarters of a point in 2023, which would be in a range of 5% to 5.25%.
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Now that the end of 2022 is within sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a Boston condo for sale. Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible.
Mortgage Rates Will Continue To Respond to Inflation
There’s no doubt Boston condo mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years (see graph below):
In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been:
“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80’s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”
Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that, moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.
Home Price Changes Will Vary by Market
As buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for next year, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in overheated areas. As Mark Fleming, Chief Economist at First American, says:
“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”
Basically, some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in that local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts (see graph below):
Boston condos and the Bottom Line
If you want to know what’s happening with home prices or mortgage rates, let’s connect so you have the latest on what experts are saying and what that means for our are
