What Home Buyers Can Expect in 2022

 

A lot can change in just six months. Russia invaded Ukraine. The latest season of “Stranger Things” dropped on Netflix. And the housing market, which received a turbo boost from the COVID-19 pandemic, has begun to shift.

Surging mortgage interest rates are rippling through the housing market, threatening to upend real estate’s unprecedented tear. These changes led the Realtor.com® economic research team to revisit its 2022 housing forecast, issued in December, and make some adjustments. The updated midyear forecast factors in these higher rates—and the disruptions they’ve already begun to cause.

We expect home prices and mortgage rates will continue to rise, home sales will drop as buyers are priced out of homeownership, and the housing market will continue to cool. However, in a bright spot for frustrated homebuyers, the number of homes on the market is expected to shoot up.

“The number of homes for sale right now is so low that it’s creating these ultracompetitive conditions for buyers, which are so challenging,” says Realtor.com Chief Economist Danielle Hale. “More homes for sale will help bring back more balance and sanity to the market.”

Mortgage rates are now anticipated to hit 5.5% by the end of the year—a rate expected to continue sidelining buyers already grappling with record-high home prices. Initially, the Realtor.com economists predicted they would hit only 3.6% for 30-year fixed-rate loans. However, rates hit a high of 5.3% last month before settling in at around 5.1%, according to Freddie Mac data.

The lower projection was made before persistent inflation became a thorn in the side of the U.S. Federal Reserve. The Fed is now hellbent on taming those runaway prices by hiking interest rates—causing historically low mortgage rates to soar.

“Rising interest rates have shifted the foundation of the economy as well as the housing market. So many homebuyers take out mortgages so that rising rates affect how expensive homeownership is,” says Hale. “It’s causing buyers to make tough trade-offs and disrupting the housing market.”

The nearly 2 percentage point difference between the initial low prediction and the actual mortgage rate increase is a game changer for the housing market

source: realtor.com

Florida property insurers file rate reductions with state

Experts say rate reductions likely will not lead to lower premiums

 

 

A state program created after a special legislative session on property insurance is supposed to pass on savings to consumers.

A state statute required insurers to file their potential savings with the Office of Insurance regulation by June 30. Many companies have filed and there are reductions, but experts believe you might not see it in your premiums.

Bronson and Elizabeth Collins said the latest increase in their property insurance premium was jaw-dropping.

“We were shocked and angry at such an increase,” Elizabeth Collins said.

“I renewed my premium,” Bronson Collins said. “And it had increased 46%.”

The 88-year-old said it went from $1,640 a year to $2,473.

“It just seemed unreasonable to see that much at one time,” Bronson Collins said.

The couple is by no means alone.

After a special legislative session, lawmakers passed SB-2D.

“Insurers that participate in the Reinsurance to Assist Policyholders or ‘RAP” program,” this year “shall reduce its rates to reflect the cost savings realized by participating in the program,” according to the statute.

Reinsurance is basically insurance for insurance companies, and like everything else, the cost has increased, according to insurers.

American Reliable Insurance is proposing a 1.3% premium reduction.

There are highs and lows, but most companies seem to fall in the 1-2% percent range.

Paul Handerhan is the President of the Federal Association for Insurance Reform.

“If the rate benefit was a 1% reduction in costs, that’s not really meaningful,” Handerhan said.

These rate reductions, likely will not lead to you paying less for your premiums, according to Handerhan.

“You’re not going to go to the mailbox, pull your latest insurance renewal and see your rates going down.

For example, the Collins’ company has not filed a rate reduction for this year, but their latest increase in premiums was 46%, and his insurer requested a 48% increase from the Office of Insurance Regulation for next year — so reducing 1-2% wouldn’t really move the needle.

“If the goal was to reduce rates for consumers, certainly that’s not materializing,” Handerhan said.

“I just wonder how much money they wasted having their special session. I don’t think anything was accomplished,” Bronson said.

Republicans, who wrote and supported the legislation, said people should start seeing a decrease in their property insurance premiums in 12-18 months.