National Housing Market Update - January 2022

January 2022 National Housing Update

Welcome to 2022! As with any new year, many of us are wondering: what does this year have in store for us?

We don't have a crystal ball, but if we take a look at where we've been and where we're sitting right now, that sheds great light into where we're headed in 2022. 

Our prediction for the real state market in 2022 is that we will continue to see an increase in prices as well as a high level of buyer competition - similar to what we saw in 2021. The lack of inventory, the high demand of buyers and the historically low rates are sure signs that the market will continue to remain hot.

In 2021 there was such high demand and lack of inventory that prices continued to creep up. Buyers across the board were willing to pay more than listing price for homes, giving sellers almost anything they asked for.

Sellers had all the leverage and were taking offers with little to no contingencies - and the terms of those offers were most often in the sellers' favor.

According to a recent report from the National Association of Realtors, growth in the housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis creating an underbuilding gap of 5.5 to 6.8 million housing units across the country since 2001.

We have seen a surge of home sales since the pandemic, and in 2021, many regions set records for year-end home sales. What about home appreciation? The average consensus from our expert panel is that home prices will rise 5.7%.

Rates are also a big topic of discussion. Most experts believe mortgage interest rates will increase in 2022 with the Federal Reserve raising interest rates at least two times. It's important to understand that from an affordability standpoint, a consumer buying a home today, versus a few years ago and potentially in the near future, is going to have a lower total payment, even though prices have gone up, since interest rates are currently so low.

Based upon all the data - with interest rates still incredibly low and the buyer demand extremely high, as well as fewer homes hitting the market - we expect that the 2022 real estate market will be very similar to what we saw in 2021.

Quick recap-

• On a positive note:
  • Buyers really want to buy
  • Rates are low and should remain low relative to historical rates.
  • The market is incredibly attractive to sellers. Sales will remain competitive, solid and strong throughout next year.
  • Home prices will continue rising.
• The bad news:
  • We're not building enough homes - there are more buyers than available homes.
  • It is getting more and more difficult for first-time homebuyers to enter the market because of the low inventory and the increase in prices.

If you have any questions about your unique situation, give us a call. We're always happy to talk.