Stride Post Latest News
Related Articles
It’s no secret that 2021 has been a hot year for real estate market. COVID-19 pandemic outbreak wreaked havoc on the housing market in a variety of ways. Mortgage rates have reached new lows. Home prices have increased. America concluded that greater space was required. Home prices rose sharply as a result of a perfect storm of supply limits, cheap mortgage rates, and record-high demand.
According to the financial website Wealth of Geeks, five distinct trends are forming that will assist homeowners in deciding whether or not to enter the real estate market this year, after the median U.S. home price reached an all-time high of $404,700 in the third quarter of 2021. According to the US Department of Housing and Urban Development, there was an almost 20% rise from the same period in 2020. If you’re searching for some relief in the crowded and competitive housing market in 2022, there may be some relief in sight: “with more housing inventory to hit the market, the intense multiple offers will begin to ease.”
According to Lawrence Yun, the national association of realtors’ chief economist. “Home prices will continue to rise but at a slower pace”. Here are five real estate trends to lookout in 2022, whether you’re looking to buy your first home or are a seasoned real estate investor.
The rise of Mortgage Rates
Mortgage rates have been rising since reaching an all-time low of 2.65 percent in January 2021. According to Freddie Mac data, the average 30-year fixed-rate mortgage was 3.05 percent at the end of 2021-Freddie Mac Data. Most experts predict that interest rates will continue to rise gradually in 2022.
Daryl Fairweather, Redfin’s chief economist, anticipates that mortgage rates will rise to 3.6 percent by the end of 2022. While rising interest rates can be frightening, bear in mind that they are still historically low. Prior to the 2008 Great Recession, mortgage rates never went below 5%. What does this mean for first-time homebuyers? If interest rates rise from 3% to 3.60%, a $300,000 loan will cost consumers an extra $100 per month.
Buyer demand and competition will decline
A lack of inventory, work-from-home tendencies, and supply chain constraints limiting new development all contributed to an extraordinary rise in buyer demand in 2021. Redfin chief economist Daryl Fairweather, on the other hand, anticipates a transition toward a less bubbly market. She predicts that this year will bring more equilibrium to the housing market, but don’t expect a buyer’s market; instead, expect more options, less frenzy, and slower price increase.
Increase in the construction of new houses
Many buyers and sellers anticipate that the housing market will calm down in 2022, but other experts believe it will remain competitive. This is unlikely to be a major shift—at least not one that shifts the market away from being seller friendly.
Building supply and labour limitations contributed to homebuilders’ inability to meet demand for new development in 2021. According to Mike Fratantoni, chief economist of the Mortgage Bankers Association, the supply shortage will begin to alleviate in 2022, resulting in more inventory entering the market. “Homebuilders will have greater success overcoming present building material shortages and should be able to boost the pace of construction to fulfil the considerable demand for purchase,” he said. According to Fratantoni, this is fantastic news for home purchasers. He anticipates a slowing in price increase as more new-construction homes enter the market. “This is welcome news for the many would-be purchasers who are currently priced out or delaying decisions due to poor supply and strong home-price rise.”
Change in the home appreciation value
Many economists be certain of that the rapid increase in property prices will slow dramatically in 2022. Especially, most economists do not anticipate a reduction in prices, but rather a halt of existing developments. According to a NAR study of more than 20 economic and housing experts, annual median home prices will rise by 5.7 percent, significantly less than the prior year. “Overall, poll respondents expect the housing market and the larger economy will stabilize next year,” said Lawrence Yun, chief economist at the National Association of Realtors. “Slowing price increases will be caused in part by Federal Reserve interest rate hikes.”
Buyers and sellers will profit from a more stable market if the predictions for 2022 come true. The real estate component of household net worth climbed by $1.4 trillion, owing primarily to increases in housing prices. While rising property prices are beneficial for net worth, rising annual payments for principal, interest, taxes, and insurance can cause overall housing costs to increase as a percentage of the household budget -Federal Reserve’s.
Real estate investors will continue buying
According to Danielle Hale, chief economist at Realtor.com, real estate investors continued to be net buyers of single-family houses in 2021 as home values and rents grew. “In 2022, investors will continue to receive solid returns on their housing market investments,” she predicted in her 2022 National Housing Forecast. “With steady demand and expected growing rental prices, 2022 will be an ideal chance to get high returns.” Most pandemic-era eviction safeguard have been eliminated, and 2022 may provide a peek of the rental market’s more usual returns to supply and demand economics. According to all accounts, real estate investments have soared during the epidemic with REITs rising roughly 29% last year.
In 2022, be prepared to buy or sell:
Regardless of housing market trends and predictions, it is a good idea to plan ahead of time whether purchasing or selling a property. Before beginning a property hunt, Danielle Hale advises consumers to carefully analyse their budget. Higher mortgage rates and rising costs will have an impact on affordability and monthly payments, so sticking to a budget is a good idea. Homeowners who are planning to sell their homes will be in an excellent position in 2022. Home values are expected to rise further, albeit at a slower rate. As the market begins to stabilize, Hale warns sellers to brace themselves for potential competition, although reasonably priced homes will continue to sell fast in many locations across the country.
