The 2021 Real Estate Market will go down in the history
books as one of the most competitive Real Estate Market on record. Covid19
initiated a buying frenzy that caused home prices to appreciate nationwide by 19.9%
between August 2020 and August 2021.
But by the fourth quarter, the housing
market began to simmer. In the month of October, only 60.3% of sales had a bidding war—down from a high of 74.5% in April.
While this could be because of the holiday
season in the 4th quarter, it could also mean that the real
estate run-up may have passed its peak.
What is the industry predicting for the U.S.A housing market in 2022?
RATES will start to rise
Most economists expect to see mortgage rates
gradually rise this year after hitting record lows in late 2020 and early 2021. FMHC forecasts the 30-year
fixed-rate mortgage will average 3.5% in 2022, up from around 3% in 2021.
The Mortgage Bankers Association predicts that
rates will tick up to 4% by the end of the year. "Mortgage
lenders and borrowers should expect rising mortgage rates over the next year,
as stronger economic growth pushes Treasury yields higher,"
said Mike Fratantoni, chief economist for the Mortgage Bankers Association at
their 2001 Annual Convention & Expo in October.5
It is important to keep in mind that even a 4%
mortgage rate is low when compared to historical standards. According to
industry trade blogThe Mortgage
Reports, “Between 1971 and December
2020, 30-year mortgage rates averaged 7.89%.”6
What does it mean for you? Alow
mortgage rate can reduce your monthly payment and make homeownership more
affordable. Fortunately, you can still
lock in a historically low rate. Whether you’re hoping to purchase a new home
or refinance an existing mortgage, act soon before rates go up any further.
We’d be happy to connect you with one of our trusted lending professionals in our network.
MARKET WILL BECOME MORE BALANCED
2021 we experienced one of the most
competitive real estate markets ever.
Fears of Covid and the shift to remote work initiated a huge rise in
demand. And at the same time, many
existing homeowners delayed their plans to sell, and supply and labor shortages
hindered new construction.
This led to an extreme market imbalance that
benefitted sellers and exhausted buyers. According to George Ratiu, director of
economic research at Realtor.com, “Prices and sellers
reached for the moon [last] year. It looks like we are now about to move back
Data from Realtor.com released in November
showed that listing price reductions had more than doubled since February 2021.
And the average days on market (an indicator of how long it takes a home to
sell) have been slowly creeping up since June.
What’s causing this change in market dynamics?
The real estate market typically slows down in the fall and winter. But
economists also suspect a fundamental shift in supply and demand.
At the National Association of Realtors’
annual conference last November, the group’s chief economist, Lawrence Yun,
told attendees that he expects increased supply to come from an uptick in new
construction—which is already underway—and an end to the mortgage forbearance
program. “With more housing inventory to hit the market, the intense multiple
offers will start to ease,” he said.
Demand is also predicted to wane slightly in
the coming year. Rising mortgage rates and record-high prices have made
homeownership unaffordable for a growing number of Americans. And in a recent
Reuters poll, nearly 80% of property analysts said they expect housing
affordability to worsen over the next several years.
What does this really mean? If
you were unsuccessful in buying a home last year, relief may be on the horizon. The Increased supply and softening demand
could make it easier to finally secure the home of your dreams. If you’re a
seller, it’s still a great time to cash out your big equity gains! And with
more inventory on the market, you’ll have an easier time finding your next
home. Reach out to us for a free consultation so we can discuss your specific
needs and goals.
PRICES ARE LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE
Nationally, home prices rose an estimated
16.8% in 2021. But the
average rate of appreciation is expected to slow down in 2022.
Danielle Hale, chief economist at Realtor.com,
told Yahoo! News, “Home asking prices have decelerated
in the second half of 2021, with median listing price growth slipping from a
peak of 17.2% in April to just 8.6% in October.”
But experts are disagreeing on how much more
property values can continue to climb this year. Goldman Sachs believes that home
prices will rise by 13.5%, while FNMA and FMHC are forecasting a 7.9% and 7%
rate of appreciation
But not all analysts are as bullish. The
National Association of Realtors are only predicting a 2.8% rate of
appreciation for existing homes and 4.4% for new homes, while the Mortgage
Bankers Association expects the average home price to decrease by 2.5% by the
end of the year.
According to Hale, “With prices near all-time
highs and mortgage rates expected to rise, we expect this slowdown in prices to
What does this really mean? If you’re a buyer who has been waiting on the sidelines for home prices to
drop, you may be out of luck. Even if home prices dip slightly (and most
economists expect them to rise) any savings are likely to be offset by higher
mortgage rates. The good news is that decreased competition means more choice
and less likelihood of a bidding war. We can help you get the most for your
money in today’s market. Contact us today to assist
WILL CONTINUE TO RISE
Along with home, gasoline, and used vehicle
prices, rent prices rose dramatically last year. According to CoreLogic, in
September, rents for single-family homes were up 10.2% nationally year over
year.11 And economists at Realtor.com expect them to climb another
7.1% in 2022.12
“Homes are expensive
now...but for most people, the comparison that is most important is how that
cost of homeownership is going to compare to the cost of renting,” Zillow Senior Economist Jeff Tucker told CNBC in November.
Tucker also pointed out that rent is less
predictable than a mortgage—and more likely to go up along with inflation.
Real assets, like real estate, are often used
as a hedge against inflation. That’s because property values typically rise
with inflation. And when a homeowner takes out a mortgage,
they lock in a set housing payment for the next 30 years. Imagine if your housing payment was only that
of 30 years ago.
In contrast, renters are at the mercy of the
market—and they don’t gain any of the benefits of homeownership, like tax
deductions, equity, or appreciation.
George Ratiu of Realtor.com told CNBC that he
advises buyers to consider their budget and time frame. If they plan to stay in
the home for at least three to five years, he believes it often makes sense to
Fortunately, it’s shaping up to be a better
year for buyers. “I think 2022 has the promise of providing less competition, a
lot more homes to choose from, and, as a result, a lot more approachable
prices,” Ratiu said.
What does this really mean? Both
property and rent prices are expected to continue rising. But when you purchase
a home with a fixed-rate mortgage, you can relax knowing that your monthly
mortgage payment will never go up. Whether you’re a first-time homebuyer or a
real estate investor, we can help you make the most of today’s real estate
HERE TO GUIDE YOU
While national real estate numbers and
predictions can provide a “big picture” outlook for the year, real estate is
local. And as local market experts, we can guide you through the ins and outs
of our market and the local issues that are likely to drive home values in your
If you’re considering buying or selling a home
in 2022, contact us now to schedule a free consultation. We’ll work with you to
develop an action plan to meet your real estate goals this year.
For over 20 years we have been helping our Clients
Sell, Purchase, Invest and Lease their homes in the Fort Lauderdale Real Estate
Market. Let us now help you
Tom Wolf Team are top producing Realtors at
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