October Housing Market Update
Hello, everybody. Happy fall. I hope that you guys are enjoying this wonderful season of all the sports, beautiful weather, all of that fun stuff. But I'm here to give us our monthly market report and we're going to cover three topics that have been swirling around the real estate industry and that I'm sure you've even seen some headlines on.
The first thing we're going to talk about is home price appreciation, which we all know has been crazy during the super sellers market. So home prices have appreciated about 19.2% year-over-year. And just to give you a comparison, the historical norm for home price appreciation is 3.8%. So 19.2%, that's incredible home price appreciation. And as we've been saying, this is simply due to supply and demand.
We haven't had enough homes on the market to meet the demand of buyers and that's what's causing these prices to rise. But home price appreciation is expected to slow. Just because it's slowing though, doesn't mean it's declining. According to the home price expectation survey, home prices are expected to increase through the rest of 2021 at 11.74%, and then slow down to around 5.8% in 2022. So basically experts are still expecting increased home price appreciation, but just at a slower and more moderate rate. Here's a local statistic from Houston Association of Realtors.
They said in their October press release that the single family home average price rose 13.4%. So pricing overall has moderated after reaching record highs in June. As you can see it's already starting to happen from 19.2% down to 13.4% and we'll continue to see that slow. So the next thing that's really a huge topic of conversation in real estate right now are interest rates. Right now we're hovering right around a 3% interest rate, but these are expected to rise soon.
Freddie Mac estimates rates rising to around 3.7% toward the third quarter of 2022. And we've attached a graph here just so you can look in your price point and see what this could mean for you, how much more home you can afford now, versus if you wait until rates start to rise. But as prices rise and as rates rise, it's going to cost more in the long run to buy a home and certainly to finance that home.
So another stat that just came out, a lot of great things from the home price expectation survey is if you look at a $350,000 home over the next five years, the purchaser of that home stands to gain just over $111,000 in equity, based on forecast appreciations for the next five years. So we give you all of these market updates, just so that you can see what this can mean for you and your family. A lot of people are saying right now, "Oh, I'm just going to wait till the market slows down." And we just don't see that happening.
All of these foreclosures that people are talking about, it's not going to happen. So we want our clients to be educated to be able to take advantage of this market. So if you have any questions, of course, feel free to give us a call. We're happy to walk through some options for you and your unique situation. So thank you all so much for watching my October Housing Market Update and I look forward to the next one.