All indications point to another very interesting year in 2022 for mortgages and real estate. If anything is certain in the year ahead, it is that uncertainty awaits. There are many influential issues to tackle, and as your trusted mortgage loan consultants, we always welcome your inquiries about specific situations.

Three of the big items to understand:

  1. Inflation — This is the archenemy to interest rates. I believe it is safe to say that our current inflation is primarily impacted by constraints in the supply chain. Beyond the global logistical woes, the mere perception of product scarcity leads to higher prices. The Federal Reserve has indicated they will likely respond to inflation with rate hikes, and mortgage rates would likely increase.
  2. Real Estate Inventory — I do not see any indication that more homes, month over month, will come on the market this year. Our epically tight supply will make it challenging for buyers as we continue to have strong demand. With remote work more accessible than ever, we have an abundance of new potential buyers hoping to relocate to Colorado. We also have a robust 30-something age group interested in entering the home buying arena. Piggyback these factors with a high percentage of homeowners who have recently refinanced to low rates, and the problem is clear.
  3. Fierce Purchase Competition — For many, owning will financially prevail over renting. While you may not find the perfect home, purchasing a home now can provide protection against appreciation and future interest rate increases (aka affordability). It may be daunting to pay a premium for market entry, but time is on your side the sooner you close. Based on what I have seen with my clients, taking an extremely bullish approach toward homeownership, as a first-timer or investor, has proven worthwhile. My trusted source of mortgage data and financial forecasting, MBS Highway, stated that nationally we will see mid to high single-digit home appreciation rates (~7%) in 2022. Being passive may not pan out.

A year of transition is likely ahead of us. The best advice I can give for anyone needing a new mortgage is to take action. You may not find the perfect home, but the cost of waiting for 6-18 months could be significant. If you choose to sit on the sidelines, even if we experience typical appreciation, you probably won’t see savings by waiting. Front Range real estate is hot and likely won’t cool down for some time. We have a saying in our office, “You think you are overpaying? Just wait and see how much the buyer you sell your property to overpays.”

As the Planet Boulder Team constantly watches and monitors the market, we strive to explain this complex, confusing, and quickly changing real estate landscape. We are here to help.