This Years Housing Market is slowly changing
Here at Summit Transaction Partners, we see a lot of what happens in many different real estate markets. We definitely get a good feel on what’s happening in the real estate market through our agents. We get a first hand look at the amount of contracts being written, offer prices, releasing of contingencies, and how much competition there is or isn’t. We wanted to share what we are seeing and explain our vibe on the 2022 real estate market. This year (2022) we are seeing the housing market slowly change.
The most substantial changes we’ve seen so far this year are higher mortgage rates. We have seen buyer demand slow down – ever so slightly. According to the Mortgage Bankers Association, applications for mortgages are down 9% from this time last year. As a reminder, we have also never experienced anything like the markets of 2020 or 2021, where values increased by the double digits. According to Moody’s home price index, there has been a 32% rise in prices during the past two years.
Supply still remains low as active listings are down 62% compared to 2020. Bidding wars are still happening, inspections are still being waived, cash offers are still winning. Despite higher interest rates, home values are still going up for some, and for the worst of us, we will see values only up in the single digits. In case you missed that, home values will still be “up”. We don’t believe there will be a crash, but we will see a dip, which will actually be a healthy outcome for our real estate market. It’s been on fire, traveling hundreds of miles per hour for far too long.
Many prospective buyers are struggling with affordability right now. We don’t anticipate prices to decline much this year, but we will see a decline in the amount housing values are increasing.
Our Predictions for 2022
- There will be less competition for higher priced homes, yet they may continue selling for up to hundreds of thousands above asking price.
- Rising mortgage rates will force some buyers out of the market.
- The prime time for refinancing has passed.
- Employees who moved to more rural areas and thought they wouldn’t have to return to work in person, may have to face the difficult decision of moving back towards urban areas.
- Suburban neighborhoods and mid-range priced homes will continue seeing not only a noticeable decrease in showings but an increase in Open Houses.
- It will continue as a seller’s market, though many seller’s will be discouraged from selling.
- Affordability limits are reaching the new construction market.
- Rents are still rising, but not necessarily as fast as the last year.