The 2021 real estate market was defined by low supply, low mortgage rate and high demand. These factors set home values soaring month after month. Now that the spring market of 2022 is in full swing, the news of rising mortgages rates leaves real estate buyers, sellers and professionals wondering how home prices may be impacted.
In an article published by MarketWatch.com, industry experts were asked just this question. The predictions varied slightly, but a common theme emerged. According to the reporter, Alisa Wolfson, one expert believes that the continued shortage in the supply of homes will be a factor in the continued rise in home prices. Another opinion, with regards to rising mortgage rates, indicates that almost 30% of purchases are cash transactions, so rates don’t affect these buyers, so demand will continue to be high. Further, experts believe that, even buyers that need to secure a mortgage have a sense of urgency to purchase a home. These buyers may readjust their budget based on the increased rates, but will continue to search for and purchase homes.
It would appear that many experts agree, the data and trends support the belief that the real estate market will continue to see high demand and, therefore, rising home prices. The rise may cool off a bit but its highly unlikely prices will see drastic decreases.
Read the entire article.
For the past several months, the news about the U.S. Housing market has repeated a very similar message month after month- high demand and low supply is driving up home prices. In fact, the average annual home appreciation rate was recorded at 19.2% in January 2022, a record high increase.
In an article published by Fortune.com, it is stated that the number of mortgage applications recently decreased a bit, most likely in response to an increase in mortgage rates. Nevertheless, it isn’t anticipated that this will result in a significant decrease in demand for houses. Reporter, Will Daniel, states, “After all, in March, active home listings in the U.S. were down roughly 18.6% compared to a year ago. And the U.S housing market is facing a shortage of nearly 6 million new single-family homes.” It will take a bit more time for the housing market to balance out.
However, home buyers should remain optimistic. Realtor.com surveyed prospective home sellers and reported that 64% of these home owners anticipate listing their home for sale within the 2022 calendar year. The survey also might give the first time home buyers, who have largely been priced out of the market, a glimmer of hope. More than half of the homeowners who indicated they would be listing their home plan to list below $500,000, which some may consider “relatively affordable”.
Those waiting for new construction homes may have to continue to be patient. “We’re at the lowest level of inventory on record back at least 23 years,“ according to Redfin’s deputy chief economist Taylor Marr. “So housing starts are not quite making that large of a dent in terms of the inventory shortage just yet.”
Read the entire article.
Photo Credit: Tierra Mallorca
Americans who have been paying attention to the housing market realize that prices have been steadily climbing over the past several months. The fact that the supply of homes on the market has not been able to keep up with the demand for homes isn’t helping control housing prices. Now, those looking to purchase are now going to have to face increased mortgage rates as well.
Since at least 2018, mortgage rates have not exceed 5% for a 30 year mortgage. In reality, the rates above 5% in 2018 didn’t last long. Prior to that short lived stint above 5% in 2018, the 30 year mortgage has remained below 5% since 2011. Mortgage rates have been slowly increasing over the past several weeks as the U.S. responds to inflation and the economic impact on a global level due to the crisis in the Ukraine. The 30 year mortgage now finally surpassed 5% having jumped to 5.02%. According to an article published by CNBC.com, rates one year ago were at 3.38%.
With news of the continued rate increased coupled with the steady climb of housing prices, which have been reported to be up 20% since February 2021, buyers will feel the hit and many might just be priced out of some markets.
Read the entire article.
As 2022 neared, real estate professionals began to forecast the housing market for the spring of 2022. Many experts predicted that the drastic increase to home values that Americans saw during the height of the pandemic, would begin to slow down significantly.
Nevertheless, as March 2022 approaches, some real estate experts are adjusting their predictions. In an article published on Nasdaq.com, Marc Rapport reports that, for example, the Zillow economists adjusted their initial prediction of a 11% increase in home values for 2022 to a predicted 16.4% increase. The report prepared by Zillow explained, “The robust long-term outlook is driven by our expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes.”
Yet, some economists don’t see that type of growth happening again this year. Lawrence Yun, the National Association of Realtors chief economist, predicts growth around 3-5% for 2022, continuing through 2023. “The good news is that home prices should begin to normalize later in 2022 as more homes come on the market,” Yun said in Rapport’s article.
Of course factors such as inflation, home price increase and mortgage rates affect affordability of home for many Americans. Even as home prices level out, these other economic factors will surely impact what the future holds for the real estate market. Read the entire article.
In an article published on Realtor.com, it was stated, “The Fed hinted … that a quarter-percentage-point increase is soon coming to its benchmark short-term borrowing rate. This would be the first increase since December 2018”. The reason for this predicted move is to help ease the rate of inflation.
This increase directly affects the rate at which banks lend money to each other. However, indirect impacts of this increase would be increases to rates for savings accounts, and of course, rates for borrowing. According to this article, “That likely will put pressure on mortgage rates, and even though the Fed’s benchmark rate doesn’t directly affect home borrowing rates, they do often have an impact.”
Borrowers and lending professionals have already seen slight increases in long term rates for loans such as the 30 year mortgage. At the end of January, the rates averaged just over 3.5%, in comparison to the 2.77% borrowers were seeing January 2021. Some experts predict rates could increase to 4% by the end of 2022.
Nevertheless, rates at even these increased percentages, are still hovering at historically low interest rates. Read the entire article for more details.
As the COVID-19 pandemic began to spread across the United States last spring and states announced shut downs, many Americans found themselves unemployed or underemployed. As a result, the federal government took swift action to provide mortgage payment relief by allowing homeowners to enter forbearance. A year later, as of March 2021, 2.5 million homeowners were still in forbearance, according to the Mortgage Bankers of America.
Realtor.com published an article, noting the opinions of experts who explain that, despite this alarming number of U.S. homeowners behind on payments, a potential foreclosure crisis is unlikely. In the article, reporter Sharon Lurye explains, the current housing market conditions are likely to provide a safety net for many of homeowners. Houses, in many parts of the United States, continue to be in high demand and the inventory remains low. Coupled with low interest rates, homeowners behind on payments, possible nearing the end of their forbearance, could still decide to sell the home for a profit. Additionally, as Americans getting their footing and learn to adjust to the current conditions, forbearance rates dropping nationwide.
Nevertheless, there are still areas of the country where homeowners are not only seriously behind on payments, but the housing market is not as strong due to weak economies and lack of employment. These homeowners will continue to need assistance by reaching out to their lender with the hopes of renegotiating the terms of their loan in a way that makes it feasible to make the payments. Still, some may decide to just sell and move to a rental property, assuming they can find a property to rend.
The good news, it seems that the U.S. isn’t headed toward a wide-spread foreclosure crisis, however there are Americans that continue to struggle and may for months and years to come.
Read the entire article.
For the past several months, the housing market in many parts of the United States has seen phenomenal growth in the price of houses. Of course, high demand and low interest rates along with low inventory are to thank for the current climate in real estate. Nevertheless, it still leaves some Americans wondering, “is this a bubble that will burst soon?” Remember, it wasn’t so long ago that Americans saw home values increase rapidly, only to crash as a result of issues created by the sub-prime lending practices about 15 years ago.
Experts do agree that the rapid gains in housing prices are something to pay attention to. Experts estimate that about 5.5% of American home prices are overvalued. Additionally, unemployment levels have still not recovered from pandemic related layoffs and business closures. According to Suzanne Mistretta, senior director at Fitch Ratings, “Slowing employment recovery and still-high unemployment levels are not supportive of long-term sustainable price growth.”
In an article published by MarketWatch.com, journalist Jacob Passy is careful to point out that real estate and economy experts do not expect there to be a housing market crash, but predict that the housing market will cool off. The reason it won’t sustain the current rate is explained by Robert Dietz, chief economist at the National Association of Home Builders, “When home prices are growing faster than incomes, ultimately that is an unsustainable trend.”
As the reset of 2021 plays out, Americans may see interest rates increase modestly, which may slow the rise of housing prices. Some homeowners who requested forbearance on their mortgage, may not be able to resume the payments due to unemployment and decide to sell their homes instead of risk foreclosure. These additional homes going up for sale may also provide a relief in the demand and help prices remain steady.
Read the entire article.
A look back at the first few weeks of 2021 and the national real estate market shows that home sales and the number of buyers increased in comparison to the last few weeks of 2020. Nevertheless, a low inventory of homes continues to create difficulty buying conditions for these would-be homeowners.
In an article published by CNBC.com, reported by Diana Olick, the housing market is compared to the beginning of 2020 where January 2021 is reported to have seen sales 23.7% higher than January of last year. According to the article, ‘“Home sales are continuing to play a part in propping up the economy,” said Lawrence Yun, chief economist for the NAR. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.”’
However, the availability of homes, in comparison to January 2020, was down 26%. This reported 1.9-month supply, compared to a January 2020 3- month supply, is the lowest ever reported. Of course, the low housing inventory coupled with the continued demand has allowed the median home price to increase a little over 14% since last January.
The article goes on to report new home sales and how builders have benefited from the shortages but also face supply and labor issues. Read the entire article.
The next few winter months are looking to be a pretty optimal time to sell a home. The mortgage rates continue to remain very low, demand for homes is high and there continues to be a drop in inventory compared to inventory a year ago. Chief economist at the National Association of Realtors®, Lawrence Yun proclaimed, “It will be one of the best winter sales years ever.”
Nevertheless, selling a home during a world-wide pandemic can offer challenges and sellers are still looking for ways to sell safely and for top dollar. An article published by Realtor.com, reported Erica Sweeney, has detailed some tips for homeowners selling homes over the next few months.
From a safety perspective, it is important to have a virtual tour available on the listing. This will allow shoppers to view the home online to get a better sense of the home layout and features. Doing this will help to keep the number of in-person showings to a minimum. When in-person showings are scheduled, masks and social distancing should be encouraged and larger time gaps between showings will help ensure the safety of all visitors. Once the prospective home buyers and agents have left the house, sanitizing all high touch surfaces will keep the home clean for the residents of the home.
Sweeney also gave tips of preparing and pricing a home. She reports, ‘According to a realtor.com report, the national median home listing price jumped 13.4% in December compared with last year, reaching $340,000, and price per square foot rose 15.9%.’ Sellers and their agents should ensure that they are pricing the house to align with the current market pricing. To add, highlighting upgrades and updates that buyers won’t have to worry about upon moving in during the winter months as well as features that accommodate work from home and e-learning from home will appeal to buyers that are in the midst of spending more time than normal at home.
Read the entire article.
Photo Credit: Nathan Walker
As the new year rolled in, many have reflected on a year of unexpected and historic events and how they impacted many aspects of the lives of Americans. The real estate market had its share of ups and downs as Americans adjusted to new realities of shutdowns, spending more time at home, and mortgage rates that continue to remain exceptionally low. It leaves many real estate professionals and American homeowners and would-be home owners trying to predict what 2021 could possibly have in store for them.
In a piece published by Norada Real Estate Investments, written by Marco Santarelli, many questions for the future of the market in 2021 are posed and explanations and predictions are provided. The article addresses questions Americans might have about a potential affordability crisis, if the value of homes will continue to rise, what the trends in new home construction might be and whether or not a housing market crash is predicted in 2021.
Santarelli indicates, “While we still face economic and health challenges ahead, it is no doubt that the nation will continue to recover from this pandemic and an improving economy will continue to prop up the housing market competition. Industry experts believe the housing market will remain strong and is set to break more records in 2021.” He describes how it continues to be a seller’s market and a continued rise in home prices could lead to affordability issues.
To add, some experts, such as Zillow Economic Research, predict that home values will, in fact, continue to increase. Some predictions call for a 3.6% increase over the next three months and appreciate of home value by up to 10% through the end of 2021.
As the demands for houses continues to outpace the availability, new home construction attempts to fill the gap. However, according to the article, “Land and material availability and a persistent skilled labor shortage will continue to place upward pressure on construction costs resulting in limited housing supply.”
Read the entire article for more predictions for 2021.