The month’s supply of inventory in the Reno-Sparks market increased slightly in May. This increase is a “seasonal” trend seen most years due to more sellers listing as the weather improves and families move due to the end of the school year. So although we are seeing a rise in interest rate we are still experiencing strong demand. So rising interest rates have yet to have an affect on the local market. If you are buying or selling in the Reno-Sparks market, the Shocket Team can help you understand the market. Reno-SparksRealEstate.com
Here is the inventory data from April 2018.
Mortgage interest rates have increased by more than half of a point since the beginning of the year. They are projected to increase by an additional half of a point by year’s end. Because of this increase in rates, some are guessing that home prices will depreciate.
However, some prominent experts in the housing industry doubt that home values will be negatively impacted by the rise in rates.
Mark Fleming, First American’s Chief Economist:
“Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market…
The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.”
Terry Loebs, Founder of Pulsenomics:
“Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.”
Laurie Goodman, Codirector of the Housing Finance Policy Center at the Urban Institute:
“Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”
Industry reports are also calling for substantial home price appreciation this year. Here are three examples:
- The Home Price Expectation Survey says that prices will appreciate by 5.8% this year.
- The Freddie Mac Outlook Report is looking for home prices to appreciate by around 7% in 2018.
- The CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis.
As Freddie Mac reported earlier this year in their Insights Report, “Nowhere to go but up? How increasing mortgage rates could affect housing,”