On the Rise. In 2022, Housing prices, rents, mortgage rates, home sales, and income / wages / salary / paychecks are all expected to rise. 2022 will hit the 2nd highest sales level in 15 years, defeated only by 2021.
Inventory will increase, but not enough. Inventory will rise only 0.30%. Homes are expected to continue to sell quickly, meaning buyers still need to make quick decisions to win offers.
Where to find sellers who can sell. Sellers most poised to take advantage of this hot seller’s market, are sellers who do not need to buy a replacement house immediately; for example, heirs/beneficiaries of real estate, second homes, vacation homes.
Home Price Appreciation continues but slows. Home appreciation relates to house or investment property increasing in value over a period of time. In 2021, Florida homes appreciated by 14.00%. In 2022, home values will continue to appreciate but slowly. Predictions from Fannie Mae estimate appreciation (+7%), NAR estimates appreciation (+2.2%).
Mortgage Rates will Rise slightly due to inflation. The Consumer Price Index (CPI) measures changes in price of goods and services. Inflation is when prices for the same goods and services begin to increase. So when inflation rises, so does interest rates. Why? Because the cost of money today for the loan you are borrowing is going to be worth less to the bank when it is repaid sometime in the future. In 2022, rates are projected to rise to 3.60 – 3.70% but not to worry, because historically speaking when looking at the last 50 years, rates will still be considered very very low. To get an idea, last year’s average monthly rate from January through December for a 30-year-fixed-rate-mortgage looked like: (2.74 -> 2.81 -> 3.08 -> 3.06 -> 2.96 -> 2.98 -> 2.87 -> 2.84 -> 2.90 -> 3.07 -> 3.14 -> 3.20%).
Why Buy Now? (1) Sales prices have increased year-after-year sine 2012 (i.e. for a decade!) and will continue to increase but moderately (2.9%). That may not sound like a lot but on a 500,000 house that’s about $15K. (2) Declining unemployment and increased wages means more home buyers entering the market; (3) As people become more social and comfortable, they will return to buying in condos and cities; (4) 45 Million millennial (ages 26-35) first-time-home-buyers are entering the housing market. (5) Because of the competitive labor market, smart recruiters will allow (or tolerate) remote working. Remote workers who previously could not afford new housing, can now expand their home search options practically limitlessly now that commuting is not a factor. (6) International buyers are allowed to travel to the U.S. if they:
- Fill out a Passenger Attestation Form;
- Are fully vaccinated; and either
- Show a negative COVID-19 test results within 24 hours of traveling to the U.S. or
- If they contracted COVID-19 within 90 days of departing, then proof of a positive viral test and a healthcare’s letter clearing them for travel. See, CDC’s 12/06/21 Travel requirements for Non-U.S. Citizens.
(7) Federal moratorium on residential evictions was lifted on July 2021; and (8) Federal moratorium on residential foreclosures ended September 2021. The foreclosure process will have a delayed kick-off since banks first need to send out a 30 day “Notice of Acceleration” letter, and then upon failure to pay, the bank can sue to foreclose. Evictions and foreclosures will increase supply. Foreclosures are also a matter of public record, so bargain hunters will be jockeying to buy.
Factors hurting housing sales: (1) Affordability to buy remain a problem. (2) Not enough homes. Home supply is 4 Million short from buyer demands. accord., Freddie Mac. (3) Many homebuilders went out of business after the 2008 housing crash, leading to a historic housing shortage; (4) Investors are jockeying to snap up homes as the tight supply keeps pushing prices higher. (5) 28% of homeowners choose not to sell because they can’t find a new home to buy.
Rentals and investments. Rental vacancies are at historic lows (5.7%-6.8%). Rents grew 30% in 2020. Rental prices will continue to increase because, home prices continue to rise and those who cannot afford to buy will continue to rent. Alternative options are move back in with family. Rising rents will continue to entice investors to buy income producing property. Investment sales will increase 3.6% in Dade and Broward in 2022.
Sources for this story include: Realtor.com, Redfin.com, HousingWire.com, and Fortune.com.
DISCLAIMER: Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant. The author Randy Gilbert, J.D. is neither an attorney nor an accountant. FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®
Great content! Keep up the good work!
First time here and agree with all said.
Great updates and projections of the market in this Jan. article. I’m sure that these indicators will serve buyer’s that have been sitting on the side lines as valuable data in their decision making process as we continue into the 1st quarter of 2022.
Great read
It is hard to find well-informed people for this subject, but you seem to know what you’re talking about! Thanks
Clear and concise.