With low home inventory and competitive sale prices, many are wondering—is now the right time to buy a home? Our preferred lending partner, Hixon Mortgage, weighs in, answering the top-of-mind question: Is the housing market going to crash? From navigating mortgage rates to understanding available financing programs, Hixon’s housing market predictions are here to help you make informed decisions. 

What to expect from the current housing market

When sensational headlines abound, it can be easy to get caught up in the uncertainty of the moment. And asking yourself if the housing market is going to crash is reasonable in an ever-changing mortgage landscape. But based on housing market predictions from our expert lending partners, there are plenty of reasons to be optimistic. Here’s what Hixon has to say about the current state of the housing market. 

Recent rate increases

According to Hixon, this year’s rate increases started back in January. The good news is, these rapid increases are starting to stabilize, but they’re not done changing just yet. Instead, Hixon projects a slow and steady increase over time in the future. What’s causing these rate increases, and how do they impact homebuyers? Well, according to our lending partners, they’re the direct result of the market reacting to inflation. In the short term, these rate increases could impact how much home you can afford. The positive side of this environment is that we’re also likely to see slower price increases as demand wanes, which could provide a buying opportunity that hasn’t been seen for a very long time. 

New regulatory reforms protect homebuyers

The number one question on everybody’s mind: is the housing market going to crash? According to Hixon, it’s highly unlikely. Since 2010, there’s been an incredible amount of regulatory reform in the mortgage lending world. Housing policy has shifted away from former practices, creating a more stable environment for home buyers. While these reforms don’t make the housing market bulletproof, they do protect homebuyers by creating a more stable baseline. 

Home prices are likely to appreciate

“Recession” is a big word with even bigger implications for our national economy. Especially for those who remember 2008, the recession and housing market crash seem to go hand-in-hand. But when it comes to the housing market, historic trends show that home values are more likely to go up during a recession than down. In fact, in four of the last six economic recessions, home prices appreciated. According to Keeping Current Matters, “[During previous recessions] home prices only fell twice, minimally in the early 90s and then by 20% during the housing crash in 2008.” 

The average home buyer’s credit is good

Another sign that the housing market will remain stable is the average homebuyer’s credit standing. Consumers’ ability to repay home loans, show stable and continuing income, and prove good credit standing make a world of difference in the market demand for houses under construction. According to a recent Fannie Mae report from March of 2022, the average first-time home buyer’s credit is 746, and the average homeowner’s credit is 754. 

This means that most homeowners are in good credit standing overall and are positioned well to invest in the housing market. Hixon believes, for these reasons, we will witness a stabilization or slight increase in the housing market. As Hixon’s founder, Derek Meyer, notes, “This is a completely different lending environment, and I believe we once again will see a stabilization.”

Rates could keep climbing

On any given day, there are mixed outlooks on what the housing market will do. But the Fed’s recent decision to raise interest rates in an attempt to cool inflation does have consequences for some mortgage rates. The less money is worth; the more is needed to catch up to the actual value of things. This stacks a chip against the rising cost of homes. 

Waiting to cash in on a dramatic rate dip? Hixon’s mortgage experts predict you might be waiting a while. It’s expected that the Fed will continue to raise interest rates every six weeks or so through the middle of next year. The one upside to knowing this information is that the market can respond accordingly. According to consulting economist Dr. Elliot Eisenberg:

 “Fortunately, for housing markets, I don’t think there’s much more bad news…. Now the markets fully expect the Fed’s funds rate to be around 3.4% by the end of this year… As long as those expectations hold and the Fed doesn’t change their agenda because the inflation data coming in doesn’t get worse, the 30-year mortgage and the 10-year Treasury won’t appreciably change.”

In other words, now is the time to lock into a good mortgage rate!

Return to normalcy 

One of Hixon’s most heartening housing market predictions is the return to normalcy. With mask restrictions a thing of the past, schools back in session, and social events showing up on the calendar again, most Americans feel more optimistic than they did two years ago. And the influx of cash in the economy is evidence that enough people can still afford to purchase a home to sustain this kind of market. Job demand is strong and the average person is well-positioned to make a competitive offer on a house. These factors make us believe that, despite some instability from inflation, buying a home is still a solid investment in your future.

Personalized lending to help you find the right mortgage

Buying a house is much more than a financial investment. It’s about finding your place in this world to call home. No matter what stage you’re at in life, our trusted lending partners at Hixon offer financial programs to make your homeownership dreams a reality. These financial specialists understand the quality of our homes, what Pahlisch homebuyers want and need, and can help you lock into a mortgage that fits your unique financial situation. 

Hixon provides the following financial programs for those looking to buy a home: 

Pahlisch’s “Long-Term Lock” Program 

Pahlisch has a long-term lock-in rate program to reserve a mortgage rate you want up to a year in advance of buying a Pahlisch home.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage can be priced a little bit better than conventional conforming mortgages that lock you into a fixed rate. And while the rates do change, unlike a fixed mortgage, that has some inherent advantages. Cap limits exist on how high the interest rates can climb, and a dip in interest rates can mean capitalizing on a lower rate if and when it happens.   

Here’s an example of how an ARM could work: 

• For the first 80 months, the rate is fixed. Beyond that, every six months, the rate could adjust by 1%
• By month 84, the rate is 4.5% and would increase to a cap amount
  

Other types of home loans to consider

Conventional Loans: Hixon offers down payment options as low as 3% for first-time homebuyers. Flexible down payment options are available for second homes and investment properties. A 620 minimum credit score applies for these loans, and long-term lock options on rates are available. 

VA Home Loans: Honoring those who’ve served in our military is a top priority. That means offering programs with down payment options as low as 0% with flexible credit underwriting guidelines to Veteran borrowers. A 580 minimum credit score requirement is also part of this loan. 

Doctor Loan Program: After several years of the pandemic, supporting our medical professionals with their first step in the journey to buying a home is more important to us than ever before. This particular type of loan is eligible for medical doctors, also to dentists, veterinarians, medical research professionals, and newly licensed residents/students. The potential to also exclude student loan payments is one great benefit of this type of loan. 

Star Loans: We’re proud to thank full-time teachers, police, firefighters, first responders, and correctional officers for their selfless work by saving them stress and money on their home loans. This includes reduced lender fees for eligible buyers (up to $500).

So, is the housing market going to crash? According to our lending partners, it’s highly unlikely.

In fact, now might be the best time to achieve your homeowner dreams. While housing market trends and interest rates are always top of mind here at Pahlish, what we love most is hearing from homebuyers about their specific needs or concerns. Buying a home is a major life decision. You should feel prepared with all the information to invest in the perfect place for yourself or your family.

What are your greatest concerns or needs right now? How can we help you make a more informed decision about your home loan or houses under construction? Get in touch with a Pahlisch New Home Specialist or contact the team at Hixon Mortgage to learn more about prequalifying for a Pahlisch home. Be sure to subscribe to our newsletter and follow us on social media for more updates.