A Quick Look At the 2022 Michigan Mortgage Market
When it comes to mortgages in Detroit, Auburn Hills, Warren, Oak Park or St Clair Shores, Michigan and beyond, the only certainty is that the market will continue to remain different from what it has been in the past. The world continues to deal with waves of the coronavirus, shortages, and explosive demand. Many voices have been reliably predicting that the market will slow, but it seems like the timelines for a cooler mortgage market seem to get longer and longer. While the rate of refinances has slowed significantly, the actual mortgage market continues to mirror the larger Michigan real estate market.
Michigan Real Estate Likely Continues As A Seller’s Market
The overall temperature for home sales remains high in Michigan. The reality for real estate prospects in Michigan is that inventory continues to remain low. And until the inventory rebounds to levels not seen for a couple years now, this means that there are more people looking for a home than there are people selling their home. Given the uncertainty of a world still dealing with a virus that has shut down entire nations, having a home base seems more important than ever. And some shifts in desires and plans has further driven the market.
In fact, there is some decent evidence that the coronavirus, shutdowns and other contributing factors have really pushed millennials towards homeownership. It seems like just yesterday that many digital news sites were explaining that millennials were eschewing homeownership to remain untethered from the traditional house with a white picket fence. But times have clearly changed, and now millennials continue to stream into the market and purchase homes.
Large and Small Michigan Builder Deal with Conflicting Conditions
Normally, the slack in inventory would be picked up by Michigan builders, but there again things are a bit topsy-turvy. While the average home in Michigan is selling for a record amount, the average freshly built home is costing more than ever. There have been countless news stories about lumber shortages and price spikes. While the lumber market did briefly cool off for a time, a combination of sicknesses and other factors has once again sent the price spiking.
At the end of the day, the higher cost to build causes builders to slow down on the amount of new housing stock that they can build. It becomes more risky with each individual house built that a change in the market might mean some significant losses. And while the homes that are built are selling, the increase in costs still means fewer units started than before. It really is a perfect storm, particularly when you consider one more piece of information.
Lastly, the supply chain issues continue to beleaguer small and large homebuilders. Whether its windows one month or lumber the next, costly delays in shipping and an overall lack of available inventory can hinder even the largest builder from getting things done on time. This is a lot of pressure on new home builds than, in turn, places more pressure on the real estate market.
Michigan Mortgage Rates Will Likely Tick Up
The latest news out of the Federal Reserve is that interest rates will soon be going up. The country has been experiencing record-low interest rates which have driven a frenzy to refinance homes and cut monthly mortgage payments. This trend is coming to a close, as rising mortgage rates do not require the Federal Reserve to raise interest rates first. The bottom-level rates are almost without historical comparison and brought many people to conclude that a refinance was finally worth it. This trend ironically helped suppress rates further, but there also is a point where refinancing cannot keep up the pace. As refinances have cooled and home inventory has hit record lows, the amount of mortgages has slowed. As a result, a complex application of risk means that mortgage rates start to climb.
It was just not sustainable, from a market perspective, for rates to remain so low for a longer period of time. With the Federal Reserve raising interest rates sometime in 2022, this will place further upward pressure on interest rates. The expectation is that the rates will head towards around four percent by the end of the year. While this could always change, pressure seems to be applying all around for an increase in mortgage rates.
Work With A Michigan Mortgage Broker
The market in Michigan is really not that different from the market across the United States. However, a local market is always subject to the subtleties of local laws and market conditions. In an era when home bidding wars are increasingly common, selecting the right mortgage broker can mean a major difference in your next real estate transaction. After all, your home is likely your single largest cost and likely one of your largest investments. Range Lending is an experienced, reliable Michigan mortgage broker that will work with you to find the best deal and deliver the quickest closing possible. Get started today with Range Lending, and purchase your next home in Michigan.