Fannie Mae projects that median home prices are expected to increase 7.9% between 4Q21 and 4Q22, which is significantly down from the past year, however, well above historical rate of 4.1% since 1987.
Fannie Mae also expects mortgage rates to increase next year from 3.1-3.4%, however, the downward pressure on prices from rising rates won’t be enough to pull prices down excluding other factors, such as a severe recesion. People are well-financed with tighter lending standards as a result of the Great Recession and on average have over $200,000 of equity in their home.
The housing shortage across the country is driving the market. South Orange County is being driven by several factors which will keep home prices up and none of which are expected to subside in the near-term:
- More people are aging in place
- People are less reluctant to move after refinancing to historically low interest rates
- Millenials are an average age of 32 driving increased demand for housing
- Homebuilder declines
- Federal Housing Policy
In South Orange County, there are only a couple last major developments, the Great Park in Irvine and Rancho Mission Viejo which is opening it’s 3rd village of Rienda in Spring of 2022.
If you would like to discuss the current state of the market in more detail, please call or text us.