Melanie and Douglas Sedam
Will the housing market crash? Let’s look at the most recent housing market trends and predictions for 2021 and 2022. We’ll discuss current overall real estate trends, price, and rent increases, housing sales and supply, mortgage rates and delinquencies, and other key industry takeaways and insights into the U.S. housing market. This year has seen an exceptionally strong real estate market, with strong housing demand in virtually every region of the country.
What a difference a pandemic like COVID-19 makes on the housing market, which advances in the opposite direction of what one would expect in a recession! More existing homes were sold last year than in any year since 2006. An improving economy and millennials approaching their peak homebuying years are fueling a residential housing boom. Low mortgage rates, combined with an increase in working from home as a result of the pandemic, have spurred a surge in housing demand, particularly in lower-density suburbs.
In the 2021 housing market, buyers are driving up home prices and leading homes to sell quickly. Some of the hyperactive buyers are making offers without seeing the property and foregoing contingencies to win bidding wars in the highly competitive housing market. The record-low mortgage rates have really sparked the increase in demand, especially among millennials. However, they are encountering a shrinking supply of available homes.
The housing market is still far from normal, with inventories down over 38 percent year over year and at historic lows. The current supply of homes on the market is at an all-time low, dating back to the turn of the century. Due to a lack of supply and decreasing interest rates or borrowing costs, home prices have continued to rise in double digits. With the recovering economy, more buyers are entering the market. And, because there is still a limited supply of housing inventory, home prices continue to rise even in a low-interest-rate scenario.
However, the latest market trends (seen in May/June of 2022) point to a shift in real estate activity, implying that we may have passed the peak of this hot housing market, which is good news for home buyers. The market is still heavily skewed toward sellers, but we may be seeing the first signs of a return to a more balanced real estate market following the most active sales period in years. Because housing inventory is limited, there may be some competition, so it pays to be prepared when you start looking for a home.
According to Realtor.com, the decline in time-on-market has slowed for the first time in nearly four months, indicating that some properties are sitting on listing portals for a little longer. These market trends point to a positive development for buyers as we enter the crucial home buying season of 2021. Additionally, compared to last year, the number of newly listed properties is also increasing, and the sharp inventory losses of recent months have moderated. The net result has been a deceleration in the growth of listing prices. While home prices are still rising at a double-digit rate, they have passed their peak growth rates.
With increased supply, home price growth will gradually moderate, but a broad price decline is unlikely. The housing market will continue to attract buyers as a result of the drop-in mortgage rates, which have fallen below 3 percent, as well as an increase in new listings. According to Realtor.com‘s Hottest Housing Markets data, as of June 29, the most improved metros over the previous year are:
* Austin, Texas (Metro Area)
* Tampa, Fla.
* Raleigh-Durham, N.C.
* Nashville, Tenn. (Metro Area)
* Denver, Colo.
* Cleveland, Ohio
* Phoenix/Tucson, Ariz.
* Jacksonville, Fla.
Douglas Sedam is the Owner/Broker of SBRanchRealty.com and can be reached at 520-829-5219 ext. 1.