Housing industry experts say 2022 will likely not bring much relief for Indiana’s housing market, which has been on a red-hot pace. Homes are being gobbled up as soon as they hit the market, as interest rates have remained attractive. But many industry observers say mortgage rates will climb next year.
In an interview on Inside INdiana Business with Gerry Dick, Compass of Indiana founding partner and Broker Greg Cooper said inflationary factors are in play.
“We don’t believe we’re going to see some eruption higher of rates, but I think that as we move through the year, 12 months from now, we’re going to probably be between four and a half and 5%,” said Cooper. “That’s a common conception right now in the finance and homebuilding industry.”
The average 30-year fixed mortgage rate is about 3.2%.
As IIB has reported over the past year, many Indiana homebuyers are putting in multiple offers for homes, only to get outbid. Cooper says the bidding war has forced consumers to consider another option: building a new home. But home construction brings its own challenges.
“There’s no such thing as a firm timeline, or in many cases of firm price, because of the availability of products and services and things of that nature right now,” said Cooper. “The good news, the positivity, if you will, is that when consumers do go through that product, and get to the end of the finish line, they’ve got a wonderful end result, despite the fact that there’s some challenges along the way.”
He says the frustration of families who choose to build are mirrored by the angst that builders are facing because of supply chain disruptions. Cooper says they are unable to get products they need to build or to finish homes.
“Imagine, if you will, hundreds and even 1000s of pieces that would go into building, new home knobs for the cabinetry, a range hood mount for the microwave, a door jamb. All these different little components that go into homes and the oddest things that aren’t readily available that builders can’t get because they simply aren’t available,” said Cooper. “I’ve watched many building supervisors this year literally want to bang their head against the wall because this process is so different than it used to be.”
Cooper encourages anyone looking to buy or build a home to practice patience and flexibility
“Patience is incredibly important. And most of ours has worn thin through this quarantine and COVID. And all of that is where we are in the world right now.”