Experts have been predicting for months that rising mortgage rates would cool down the market this year, and supply would start building to pre-pandemic levels.
However, housing market experts polled in a recent Zillow Home Price Expectations Survey now say that inventory likely won’t return to a monthly average of 1.5 million available units until the end of 2024.
In the survey, experts were asked when they expected to see inventory return to the 1.5 million units, which is around pre-pandemic supply levels.
While only 4.2 percent believed it would happen this year, 36.8 percent said it would in 2023, and 37.9 percent said 2024.
Around 11 percent believed it would take until 2025.
Total inventory was at a monthly average of 1.6 million units in 2018 and 2019, before falling to around 1 million in 2021. Monthly supply for 2022 is even lower, according to the survey.
As a result of the lack of supply, home values have skyrocketed. Home values in the U.S. have risen by 32 percent in the past two years, according to the survey.
Zillow also recently adjusted its 2022 home price appreciation forecast from 6.6 percent to 9 percent, a further indication that supply is unlikely to meet demand by the end of the year.
While it’s a far cry from the 19 percent appreciation in 2021, it’s closer to the balance that eager buyers are seeking.
Many market experts insist that despite the rising mortgage rates — which recently reached 5.25 percent on some indices — this figure remains historically low.
The bottom line, these experts say, is that if a buyer is in good financial health, it can still be the right time to buy a home.
Additionally, some experts are reminding borrowers that it could be the right time to get a cash-out refinance while home prices are at record highs.
Refinancings have slowed significantly as mortgage rates rise, but the right time to refinance is a personal decision, experts say, and one that’s based on a borrower’s current home needs and goals.
A cash-out refinance allows homeowners to tap into current record amounts of equity, and use the cash in whatever ways they’d like.
The most common uses for cash-outs include home improvements or paying down debt.
Above all, experts say the most important piece in purchasing or refinancing in the current market is to shop around for the best rates from lenders.
An experienced, trustworthy lender also can help a borrower determine whether now is the right time to refinance, or if the rates and fees outweigh any benefits, experts say.
Despite the inventory outlook, experts say supply will still be growing over the next two years — so eager buyers shouldn’t feel like they have to wait two more years to find their dream home.
As supply slowly increases, opportunities will increase, experts say, and prices will begin to stabilize.