The pandemic ignited a home-buying frenzy as the decade-long housing shortage converged with historically-low mortgage rates, shifting workplace dynamics and new opportunities for young buyers to pursue their first homes. As we near the end of 2021, here’s a look at the expectations of real estate experts for 2022.

Danielle Hale, Realtor.com chief economist: We expect a whirlwind 2022 for the housing market. Home sales are expected to increase another 6.6% and home prices to rise another 2.9% on top of 2021 highs. A gradual uptick in mortgage rates will make affordability a top consideration for home buyers, especially the 45 million Millennials aged 26 to 35 who are at prime first-time home buyer age. Demand from these young households will keep the market competitive and fast-paced despite a small uptick in housing inventory as builders continue to ramp production, increasing single-family starts by 5% in 2022.

Although affordability challenges will come from rising prices and mortgage rates, rising rents, which are projected to increase 7.1% will be a strong motivator for many hopeful first-time buyers. On top of this, all home shoppers will have some advantages that stem from a competitive jobs market. Incomes are projected to increase by 3.3% and with many employers looking to attract and retain talent without impacting costs, we expect workplace flexibility will continue. This should free-up potential home buyers to broaden their search parameters to include the suburbs and in some cases even completely new, less pricey metro areas.

This means we expect the suburbs and markets that offer good real estate value to continue to attract an outsized share of attention. While this has reduced the relative affordability of many such areas, they still offer a lower price per square foot and thus opportunity for buyers. On the whole, the housing market will remain competitive, but buyers will have new ways to confront these challenges.

Bob Pinnegar, president and CEO of the National Apartment Association: Housing affordability will remain a key issue as the nation’s rental housing market tries to stabilize from lingering pandemic and housing stock issues. Supply chain delays and continued inflation will also impact every facet of the industry, from property managers to renters to owners.

While the pandemic brought an increased focus on housing affordability at the national level, affordability has been a key concern throughout the industry for years and will continue to be an area of focus in 2022. Demand for apartment and single-family homes continues to outpace supply, which ultimately drives competition and hurts housing affordability. Attention throughout the industry and at all levels of government will be focused on remedies to provide quality and affordable housing.

It’s also likely that we’ll see increased regulatory efforts directed at the rental housing market after a tumultuous time during the pandemic. Though highly disputed by economists nationwide, rent control policies are gaining steam and will continue to be pushed as a quick solution under the guise of preserving affordable housing. Other industry regulations are also being examined, fueled by the expiration of pandemic-induced eviction moratoria. These policies must be watched closely, as they achieve the opposite of the intended effect, driving up housing costs as available housing units leave the market and competition increases.

Jarred Kessler, founder and CEO of EasyKnock: As the country begins to move towards a new post-pandemic normal, I expect lingering economic uncertainty will continue to drive the unpredictable housing market in 2022. We’re in the midst of historically low interest rates that are driving a hot housing market, but what goes up, must come down, and I expect the housing market will slow after the new year as interest rates will undoubtedly go up.  

However, in 2022, we will continue to see new home construction not meet the continued demand as the United States deals with ongoing supply chain issues and labor shortages. This will lead to fewer new homes on the market, which means even with increasing interest rates, we may still continue to see record-high sale prices. All of this perpetuates the need for alternative methods of buying and selling and supports the growth of companies like EasyKnock that allow American homeowners to convert the equity they’ve worked hard to build.

Nick Bailey, president of RE/MAX, LLC: Home buyers should find the coming months to be more advantageous than any time in 2021. While sellers remain in a very strong position, price stabilization and the continuation of competitive interest rates may bring some welcome relief to buyers in the new year. Inventory is and likely will remain a challenge for some time as shortages in labor and materials, as well as general supply chain challenges, delay new construction. Last year was a strong year for sales and 2022 should continue to be. As the market begins to rebalance and buyers who were sitting on the fence decide to get in the game, the value of a skilled, full-time real estate professional will be even more evident. 

Much of the real estate industry could be digitized even before social distancing spurred a radical uptake in digitization. The push toward modernization will continue at lightning speed, yet while more homes are found online and virtual home tours take the place of open houses, the emotional investment and industry-understanding that agents can provide for a complex transaction will remain crucial to the home-buying and selling process.

Brent Fielder, executive vice president of Proper Title:We expect to see incremental growth in housing sales in 2022, but a significant drop in refinancing activity as interest rates rise. The real estate-owned (REO) market—also called lender-owned property—will increase as Covid mortgage bailouts expire.

The home-buying experience will proceed with its digital transformation as the real estate brokerage and title industries continue to embrace technology. Electronic options for closings and sales opportunities will become more commonplace for everyday use, which meets the demands of Gen Z and Millennial home buyers. Top priorities for real estate agents and attorneys will be establishing strong customer connections for referral transactions and staying on top of evolving market and industry trends.

Lawrence Yun, chief economist for the National Association of Realtors: Mortgage rates will drift higher as the Fed scales back the purchase of the mortgage-backed securities and raises short-term interest rates, which are likely to hit 3.7% by the year-end 2022 on a 30-year rate after hovering at 3% for most of 2021.

Home sales will notch lower by 2% in 2022, principally because of higher mortgage rates. Home sales will not crash thanks to job gains, investor demand and the work-from-home reshuffle in residential location choice.  

Inventory will finally increase due to more home construction, the ending of the mortgage forbearance program and the rise in Covid-related deaths among the elderly. Softer housing demand with more supply will calm the home price growth. Home prices will only rise 3% to 5% nationally.

Skylar Olsen, principal economist for Tomo: Housing in 2022 should be calmer, but don’t expect the full return to sanity. Anyone who explored buying or selling a home this shopping season experienced something intense. We just didn’t know how hot housing markets could get until new record lows on interest rates moved up first-time buyer timelines.

With many parents pulling out their equity to get down payments for their adult children or second home buyers using up portfolio collateral to buy homes away from struggling urban cores, and investors rushing in to diversify portfolios away from over-valued stock markets and capitalize on the potential long-run demand shift that of remote work might bring, the housing market has been anything but typical or normal.

So what will be different about next year? Well, investor buyers are fast, early movers and interest rates should start to rise. Both these things imply some pressure could come off. The urgency to buy now for the financial opportunity of historically low rates or the arbitrage opportunity from remote work will be less. However, there will still be plenty of buyers hoping to hit life’s milestones in a new home. 

The pre-pandemic fundamentals were indicative of a demographic wave crashing onto too few homes. The majority of forecasts expect home prices to continue to rise next year, and we agree. Housing will be slower, but only compared to the fastest market in history.

Tom Rossiter, CEO of RESAAS: Prior to Covid, using technology was seen by many real estate agents as a “nice to have.” Now it’s simply a requirement to do business. We expect real estate technology to further evolve in 2022, and for both sellers and buyers to use digital tools even more during the entire home-buying process – from listing to interacting with agents to closing deals. 

Patterns we are observing from our exclusive real estate data show us that heightened buyer migration is still not over. The Great Relocation of 2020, where people realized remote work unlocked where they call home, set new records. We are still seeing elevated levels of referrals for buyers looking to move out of state and predict this will continue into the new year as well.

Robert Dietz, senior vice president and chief economist for the National Association of Home Builders: With housing demand solid and existing home inventory too low, home construction should continue at a strong pace in 2022, according to NAHB forecasts. Single-family builder confidence at the end of 2021 is high, registering a level of 83 on the NAHB/Wells Fargo Housing Market Index. We expect a slower growth rate for home building in 2022, but the level of single-family housing starts will be about 25% higher than it was in 2019, pre-Covid.

Nonetheless, supply-side headwinds are limiting the pace of construction and increasing costs. In particular, ongoing supply chain challenges, insufficient lumber production, higher lumber tariffs and delays for deliveries of just about all types of building materials have frustrated builders and buyers. Construction costs are up 19% year-over-year. In 2022, some of these supply chain issues will ease, but the skilled labor shortage will grow worse. The construction industry needs to add 740,000 workers a year to account for industry growth and yearly retirements from the sector per a new NAHB estimate for the Home Builders Institute.

Higher construction costs and an expectation of rising interest rates, as the Federal Reserve tightens monetary policy on inflation concerns, will result in additional declines for housing affordability. Policymakers should act to reduce the cost of land development and home construction. Communities that successfully do so will win the competition for population growth and business expansion.

Additionally, multifamily construction should continue to expand, given ongoing growth in rents. Suburban apartment construction in 2020 and much of 2021 made up for some weakness in urban core areas, but now most geographies are seeing gains for multifamily development. In addition, the single-family built-for-rent segment should continue to expand after experiencing the best quarter on record during the third quarter of 2021. And given wealth gains for homeowners due to rising home values, the remodeling sector will realize strong growth in 2022 as homeowners seek to add space, improve energy efficiency and increase resiliency of an aging existing housing stock.

1. Ryan Gorman, CEO of Coldwell Banker Real Estate: Fundamental demand from home buyers remains strong as Americans continue to dream of homeownership, and those dreams may be more likely to become reality due to partial remote work widening search areas to positively impact affordability, even with price increases. 

In addition, during the tail end of 2021, foreign buyer and investor interest in U.S. real estate and mortgage assets was heightened. If that continues, demand could escalate further, hopefully coaxing more existing inventory onto the market, though new construction will likely continue to face supply chain delays. As funds from around the world seek safe, stable and valuable investment opportunities, U.S. real estate remains among the most attractive and largest asset classes for investors and families alike. With continuation of these trends, the seller’s market that we’ve seen this year may continue into 2022.

Carla Ferreira, director of onsite development and principal at The Aurora Highlands: We anticipate a strong 2022 for the Colorado market as lot availability widens, the economy stabilizes further and more product is offered. Home sales should increase as buyers are feeling urgency with expected interest rate increases coupled with rising prices in 2022.

The trend of Millennials moving to the suburbs will continue as will the moderate increase in new home prices. Homeowners are looking towards master-planned communities that offer home buyers amenities, room to grow and home offices. 

Approximately 75% of new home starts are currently larger communities. We do anticipate a 10% to 12% increase for starts and closing, however there will continue to be a lag in closing times due to supplier and labor challenges.

Laura Ellis, president of residential sales and executive vice president of Chicago-based Baird & Warner:Underlying fundamentals point to another robust year in 2022 with inventory as the wild card. Competitive bids are already slowing down so that may entice many potential buyers who avoided entering the market last year because they were intimidated by multiple offer situations.

If low inventory persists, it could be a market spoiler. As of November 2021, the number of active listings was down nationally more than 55% compared to November 2019 and will continue to be the most significant limiting factor. There’s a lot of pent-up demand from buyers, but sellers will continue to be hesitant in listing their property if they aren’t confident about finding – and closing – on their next home.

Oisin Hanrahan, CEO of Angi: In 2021, we saw a significant shift in the way people think about their homes. The value of home has a new meaning, shifting from thinking about our homes first for its fiscal value or as an investment, to now where our home’s many uses are the primary focus.

For the second year, homeowners have told us that their main reason for taking on projects around the home is to better meet their needs. Before the pandemic, return on investment was the primary motivation. This is a huge shift and something we know will continue throughout 2022, especially as people continue to spend more time at home. As these trends play out further and projects that were put on hold due to Covid disruptions resume, we’ll see the demand for home projects increase to meet the newfound time and focus on the home.

We also continued to see Millennials step into homeownership. As the first digital native home-buying cohort, they expect solutions on demand, on their phones and a simple, easy experience. Their expectations will shape and impact home services in the year ahead, including a strong desire for end-to-end services that align with consumer expectations.

Frank Nothaft, chief economist for CoreLogic: With the Federal Reserve gradually tapering its supportive monetary policy, look for 30-year mortgage rates to average about one-half of a percentage point higher in 2022, or about 3.4%. We expect to see a moderation in buyer demand as the erosion in affordability takes a toll and additional for-sale inventory comes on the market. 

With more supply from new construction and existing owners relocating, home sales are expected to rise to the largest number since 2006. With less demand, we expect homes listed for sale will be on the market a bit longer with fewer competing bidders, which should moderate price growth. The CoreLogic Home Price Index Forecast has the annual average rise in the national index slowing from 15% in 2021 to 7% in 2022.  Similarly, rent growth on single-family homes reached the highest ever recorded in the CoreLogic Single-Family Rent Index in 2021 and is projected to slow as additional rentals enter the market.

While we expect home-purchase originations to rise, the higher mortgage rates will reduce refinance originations and alter its composition. Refinance originations will likely have a much larger cash-out share in 2022 with slightly lower average credit scores and lengthening of the average loan term.  Employment and income growth should continue to keep new delinquencies at a very low level. But the end of foreclosure moratoria and the CARES Act forbearance program will likely result in an uptick in distressed sales in 2022, but this increase will be small.

2022 should be a strong year for housing. Look for mortgage rates to rise but remain historically very low, home sales to grow to a 16-year high, price and rent growth to slow, refinance to shift toward cash-out and delinquency rates to remain low albeit with an uptick in distressed sales.

Matthew Vernon, retail and centralized lending executive for Bank of America: Prices throughout 2021 have risen substantially, and competition has been hotter than ever given the low supply of homes. At the same time, rent prices have sped past projected estimates based on pre-pandemic trends, making homeownership and steady monthly mortgage payments even more attractive, particularly for Millennial buyers.

This demographic is in its peak home-buying years and 52% of younger generations say the importance of building equity has become more important recently. We expect to see a continued increase in home-buying interest and competition while mortgage rates remain low. We’ll also see some homeowners wanting to trade up to larger homes. As the Federal Reserve may raise interest rates next year, those already in the position to look into larger homes will aim to tap into lower rates while they can next year.

Jeff Benach, principal of Chicago-based Lexington Homes: Overall, the housing market should stay pretty hot through 2022, including markets like Chicago. As of now, all indicators point that sales will likely continue at a fast clip until the supply chain issues settle down and until we get completely past Covid-19, both of which should occur in 2022 when the pandemic will be considered behind us by most people. Inflation often helps housing, and it certainly doesn’t seem to have hurt it so far. As for new-home sales specifically, expect to see the continuation of Millennials as the demographic leading the charge in 2022.  

Home designs will also continue to be influenced by the pandemic – likely well beyond 2022 – as buyers demand more from their homes, such as multiple offices or remote work/study spaces and multifunctional kitchens that can do it all.

Ben Miller, co-founder and CEO of Fundrise: Some pundits, alarmed by slowing sales in the fourth quarter, are forecasting doom for the residential real estate market next year. But the doomsayers miss a key point: seasonality. Historically, housing prices regularly move almost 7% to 8% between the lows of winter and the highs of spring. Yet every winter, outsiders mistake seasonal swing for secular decline. We expect to see housing prices surge in spring 2022. And beyond that, we expect continuing strength in the single-family rental market, which has soared over the past 18 months. 

More crucial to the expected surge in home prices: the excess positive pressure on the economy. The U.S. annual inflation rate is above 6%. Unemployment claims are at their lowest in 52 years. Interest rates are still at historic lows. At least $1 trillion and as much as $3 trillion of fiscal stimulus is underway. And, according to Moody’s Analytics, Americans have $2.5 trillion in overall excess savings from the pandemic era. That buys a lot of houses. So, buckle up.

Susan Wachter, the Albert Sussman professor of real estate at The Wharton School of the University of Pennsylvania: After a year of home prices rising at a blistering 18% rate, housing prices are expected to decelerate to single-digit rates across major metropolitan markets. Fed actions to contain inflation, now running at a 40-year high, will cause, in the consensus forecast, a small (0.5%) uptick in mortgage rates in 2021. This will moderate demand. 

If inflation persists or heats up further, a liquidity retreat and a negative tail event with an interest rate spike are possible, although not likely, for 2022. The likely outcome is that 2022 will be a banner year for housing, with single-family starts at over 1 million, and easing inventory constraints. Nonetheless, demand and supply imbalances will persist and high construction costs, due to persistent labor, materials and land shortages, will generate increases in home prices, although at lower rates than in 2021.

Population mobility will remain low, but expect continued movement to lower-cost metros with outdoor amenities and employment growth. Texas, Florida, Arizona and North Carolina will continue to outpace the nation in new home sales.

For the nation as a whole, expect homeownership headwinds. As Millennials, who are in their prime home-buying years, postpone homeownership, multifamily demand and rents will rise, adding to a challenging economy of scarcity, even amid strong economic growth and the prospect of a pandemic recovery.

Dawn Pfaff, president and founder of My State MLS: We are forecasting that prices will continue to rise in 2022 but at a more moderate pace than 2021. Going into 2022, demand won’t be as high, and supply is going to be a bit better than 2021. Mortgage rates will grow but still be a reasonable value for home buyers. Inventory of available properties will remain low, but home builders are ramping up, and many sellers are itching to sell at their new higher prices. 

We expect rents to outpace home price growth because demand is still greater than supply. First-time home buyers will continue to struggle because of higher prices and the supply problem. Bottom line, 2022 is still going to be a seller’s market, just not as frenetic as 2021.

Sean Grzebin, head of consumer originations, Chase Home Lending: According to a recent survey of first-time home buyers that Chase conducted this year, 60% said they were likely to buy their home in the next year, and 70% have already made lifestyle changes in order to work toward achieving that goal. This shows us that Americans continue to aspire for homeownership, that they still view home buying as a smart decision for building wealth, and as we head into 2022, that they’re serious about reaching their goals to own a home. 

Additionally, the latest generation of buyers will be more diverse than ever before. According to a 2021 report by the Urban Institute, net growth in the number of homeowners in the next 20 years will be entirely among people of color, especially Hispanic homeowners. Between 2020 and 2040, there will be 6.9 million net new homeowner households, a 9% increase. Hispanic homeowners are expected to grow by 4.8 million and Black homeowners by 1.2 million.   

Despite home-buying optimism, there are still barriers that exist to prevent people—particularly Black and Latin/Hispanic communities—from accessing and sustaining homeownership. Many of these families may be home buyer-ready today, but the challenge is making sure they know that—and ensuring that we have the home financing products and services that fit the needs of this new set of home buyers. 

One of the new ways Chase is helping to educate home buyers is through our Beginner to Buyer podcast launched this year. The podcast aims to break down barriers to homeownership by hosting real conversations with real people, helping to answer the questions you always wondered, but were maybe too afraid to ask.

Sean Black, co-founder and CEO of Knock: Home shoppers who put off their plans to buy in 2021 will have the benefit of more inventory as remote work provides the flexibility to live farther from the office and sellers continue to get off the sidelines. Rising home prices will combine with higher interest rates, making affordability more of a challenge, especially for first-time home buyers struggling to come up with a down payment.

The good news for consumers is that the focus on simplifying the real estate transaction will continue to gain steam. In the future, buying and selling homes will be more like renting an Airbnb with the upside of building equity rather than the complicated, painstaking process it is today.

Kevin Quinn, senior vice president of retail lending at First Internet Bank: If the past 12 months have taught us anything, it’s impossible to predict the future. This past year was a challenging one for home buyers, resulting from a mix of low rates, fierce bidding wars and limited inventory.  But I believe we may start to see the market normalize to a degree in the coming year. Mortgage rates and home prices will continue to uptick, but not at record rates. However, if inflation continues, we may see the Federal Reserve begin to increase mortgage rates, impacting prospective buyers.

Jacob Channel, senior economic analyst for LendingTree: Barring a major resurgence of Covid-19, we expect higher mortgage rates as well as a boost in new construction driven by improvements made in global supply chains to result in a somewhat calmer housing market in 2022. While home prices aren’t showing signs of a significant decline, price growth likely won’t be as drastic as it has been since the start of the pandemic. Instead, the double-digit, year-over-year, growth that we’ve seen in many parts of the country through 2020 and 2021, will be replaced with more manageable single-digit growth.

For buyers, higher rates—which are on track to end up somewhere near 4% by the end of the year—may be a cause for concern, but it isn’t all bad news. In fact, with less competition and more housing available, some buyers may have an easier time navigating the housing market, even if they’re paying more for a loan. 

From a homeowner’s perspective, selling a house in 2022 might prove to be a bit more of a challenge than in the past two years, but even so, the average homeowner shouldn’t expect to be underwater on a home they can’t get off of their hands. 

Ultimately, even if the housing market isn’t as hot in 2022, it’s unlikely to crash anytime soon. As a result, both new buyers and current homeowners shouldn’t worry too much about what the new year holds in store.

Patrick Boyaggi, CEO of Own Up: Covid-19 remains a wild card, and the uncertainty it causes will likely put the housing market into flux in ways we can’t expect. Here’s what we do know: Rates are at an all-time low, which heavily increased buying power in 2021. I anticipate that rates will rise in 2022, but it won’t be enough to meaningfully slow down the purchase market. More likely, the rise in prices due to the supply and demand imbalance will have a bigger impact than rising rates will. 

When homes become too expensive, consumers are either priced out or more inclined to hold back until the market levels out. This will limit the total purchase market. Until then, we expect to see an increase in the prevalence of all-cash offers, especially in highly competitive markets. 

Given that the highly competitive housing market is here to stay, at least into the first half of 2022, it’s increasingly important for consumers to shop around for their mortgage. The average range for a loan scenario is about 0.5% for every borrower–that’s the difference of 30k over the course of the loan for the average homebuyer. Even if rates rise slightly in 2022, shopping around can significantly increase a prospective homebuyer’s chances that they’ll receive the lowest rate out there.

Milford Adams, Denver Metro Association of Realtors2022 chairman of the board of directors: 2022 will continue to be an indisputable seller’s market around the nation with higher appraisal gaps as supply chain will continue to be a major issue that the world has to combat. We’re hearing reports that we need 100 million homes to stabilize the market and, frankly, that’s not going to happen anytime soon. 

In fact, here in Denver, we’re suspecting that the market will stay this way longer than the three years originally predicted, but closer to five years before we see any stability nationwide. Expect to see people getting certifications to move into their homes despite the fact they may not have cabinets for six months or a garage door as it sits on the dock somewhere dwindling with supply chain disruption. As buyers get out there in a world where inventory remains short, they need to be persistent, be patient and have a plan.

Steve Hart, CEO of Property Management Inc.: With the hot real estate market in 2021, we saw several investment property owners selling or liquidating their investment portfolios. They want to sell when the market is high. It’s still a hot market right now because the mortgage rates are low, and there are a lot of people buying. In 2022, I predict it will level out and become more of a normalized market. But even though it will slow down, it’s not going to stop. 

The market will still be strong, but the hot pace of sales will slow down, which should increase the number of homes on the market. When that number of homes on the market increases, we won’t see the bidding wars or craziness that we’ve seen in the last year or two. There will still be a high demand for homes on the market, and pricing will still continue to grow, just not at the same rates that it has been.

Todd Teta, chief product officer of ATTOM: Among the many key forces that drive the housing market, it’s reasonable to predict that home prices will keep going up by small amounts over the rest of this year and into early 2022. While things usually slow down in the fall and winter, with interest rates still super low and no sign of demand dropping off amid a tight supply of homes for sale, upward pressure on prices is likely to continue for the short term. Prices have spiked this year by double-digit rates every quarter, so it would take a significant change to reverse that course.

Beyond that, there are many questions hanging over the market, including the path of interest rates, the stock market, the pandemic and the economy, as well as the continued willingness of home buyers to keep paying soaring prices. If things keep going as they are, prices should continue to rise, especially with interest rates so low and the stock market providing the resources for hefty down payments. But if we get another Covid wave—it looks like that’s starting to happen—and the number of households unscathed by the pandemic wave taps out, or the stock market falls from its record highs, that could certainly tamp things down.

Other factors that come into play include inflation, price affordability and foreclosures. Home affordability has worsened recently and foreclosures are on the rise now that lenders are again free to go after homeowners far behind on mortgage payments. Major ownership costs on the typical home nationwide still consume just 25% of the average wage, but are pushing closer to the 28% level that lenders often use as a benchmark for giving mortgages. And, with foreclosure activity up in November by 94% from a year earlier, further increases could lead to a flood of empty homes on the market, which would raise supply and lessen the bidding wars we are seeing throughout the country.

Ann Gray, newly elected president of RICS: While there was a lot of residential market disruption in 2021, it didn’t appear to have affected values or new starts in urban markets. The sector stabilized quickly and is poised to continue its momentum in 2022, based on what we’re seeing from investors, buyers and our professionals. Our numbers are showing that investors and capital providers are very optimistic at least through Q2. They’re also telling us now is a good time to have property to sell, with the overall economic recovery still in a sharp upturn and demand expected to stay high.

The housing shortage, exacerbated by high barriers to entry, is likely to benefit from enthusiasm across the board from sellers and lenders, but especially from investors. Fast-growing Sun Belt and Mountain West cities like Phoenix, Denver and Austin are showing huge demand from young buyers and renters pursuing jobs at relocated tech and service sector employers. The single-family rental market will also continue to see activity for the same reason, as younger families make quality-of-life decisions. 2022 will see continued high volumes of activity along with new starts in non-housing sectors that support population growth.

David R. O’Reilly, CEO of The Howard Hughes Corporation: Over half of the people in the United States will consider moving in the next two years as people continue to prioritize time with family, cost and quality of living and a desire for safe and clean neighborhoods. 

Businesses will increasingly follow today’s educated workforce as they migrate out of the major metropolitan areas and establish their presence in the smaller cities and communities that exemplify today’s new urban ideal—the best of an amenity-rich, walkable urban environment integrated into expansive natural settings to provide the best of both worlds.

As the migration continues, we will see issues of affordable housing and traffic will garner even more focus as people consider where and how they want to live. We predict that in 2022, Millennials and the transient labor force will demand even greater options for housing and community connectivity to meet the exponentially growing demand.

Jeff Allen, president of CubiCasa: The supply of homes available for sale will remain extremely limited in 2022 compared to historical standards, which means houses will continue to go under contract quickly and at strong prices. We shouldn’t expect another year of 20+% home price appreciation by any means, but supply and demand dynamics will continue to tilt in favor of the seller for now. 

Don’t expect a massive home price correction downwards in the near future. First-time home buyers will still face headwinds as higher prices lead to higher down payment requirements, and fast bidding wars during the listing process.

The process to get a home under contract may be fast, but unfortunately the process of closing a purchase mortgage still takes entirely too long, driven largely by the lengthy, expensive and uncertain appraisal process. The FHFA’s announcement that they’ll be starting to offer consumers the much faster and frictionless Desktop Appraisal on GSE loans in early 2022 will be an important turning point in appraisal modernization. And it should drive exciting new efforts to collect robust property data upfront in the listing process, in order to facilitate a smoother buying experience on the mortgage side.

Gary Feldman, founder of the Gary Feldman Group at Aspen Snowmass Sotheby’s International Realty: In 2022, Aspen real estate will see unprecedented demand combined with shrinking inventory, especially at the luxury end of the market. Sellers will continue to expect high sale prices, and will likely see record sales. Buyers will continue to pay historically high prices as opportunities become scarce.

Market-wide, we’ll continue to see the price per square foot increase breaching the $4,000 price per square foot level for truly special properties. In the past year, 75 single-family homes sold for more than $10 million in Aspen, whereas only 17 single-family homes are currently listed for over $10 million. As inventory dwindles, days on market will continue to shorten with many deals being struck prior to listing in the MLS.

Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors: Next year will again be big and almost as boisterous as 2021. We expect to see home sales continuing to grow in Northern Virginia with demand exceeding supply. Based on what we saw this year, we know that even with typical seasonal fluctuations, the market outpaced five-year averages with sales and listings.

In 2022, we expect home prices in the NVAR region—right outside the nation’s capital—will rise, but at a more moderate pace than seen in the past 12 to 18 months. The 2022 market may be a bit cooler than 2021 but will still be a strong year for Realtors and their clients.

By year end, we will not be surprised with mortgage rates pushing the 4% mark – still well below historical patterns but possibly edging some potential buyers out of the market. However, the recent announcement by the FHFA raising the GSE conforming loan limits will help offset mortgage rate increases.

Judy Zeder, real estate agent with The Jills Zeder Group at Coldwell Banker Realty: I’m bullish on real estate for 2022. With all the changes and disruption in almost every market area, from supply issues and challenges in the hospitality and service businesses, to volatility in securities markets and cryptocurrency, the one constant in growth and stability has been in real estate. 

Changes caused by the pandemic and its residual impact on the workplace prompted pivotal decisions by CEOs and executives to move their businesses and their personal residences to South Florida. The drivers of those decisions included no state or local income tax, no estate tax, good homestead laws and overall desirability of the area. Those factors remain constant, are still attractive from both a personal and business standpoint, and support a positive outlook on real estate in South Florida.

Phillippe Lord, CEO of Meritage Homes: We expect to see continuing strength in home-buying demand especially in the affordable market, as a result of demographic trends in home-buying activity from Millennials and Baby Boomers as well as continuing remote work opportunities. However, housing supply headwinds from ongoing supply chain constraints will impact inventory at least for the first part of the year.  

We also anticipate an uptick in mortgage interest rates—although we do not expect them to increase dramatically or abruptly—while incomes rise and the economy strengthens. The new FHA loan limits that will become effective January 2022 will allow for additional first-time buyer participation across the U.S.

John Heck, senior advisor of lending solutions at Capacity: The biggest change for mortgage and insurance companies is to understand that “data” has become their product. All innovative solutions will need to solve for that fact.

Zero-knowledge proof will expedite the entire process, significantly eliminate many operational expenses, massively reduce fraud and, ultimately, will facilitate the manufacturing, delivery and actual model performance of mortgage assets.

However, the biggest innovative changes will be driven by the non-agency qualified mortgages, non-qualified mortgages and jumbo asset managers. They will be focused on removing many non-data centric redundancies from the secondary and capital markets, and this transformation will drive massive changes to the front end of the industry. Zero-knowledge proof or true data will replace the “presumption” of true data.

Source: https://www.forbes.com/sites/brendarichardson/2021/12/13/experts-predict-what-the-housing-market-will-look-like-in-2022/?ss=real-estate&sh=69c2c46b3942 

 

The United States House of Representatives passed a historic trillion dollar bipartisan infrastructure bill on Friday that is guaranteed to impact the lives of all Americans as soon as the next few months, said President Joe Biden.

The new provision, which the President called a “once in a generation investment,” includes budgets to improve bridges and roads around the country, expand broadband access, plus details involving electric vehicle infrastructure, water contamination, pollution and more.

Needless to say: this is a big deal. But how will our lives change in New York on a day-to-day basis? Here are six major ways that the bill will impact our city directly:

1. Our airports are finally getting a big upgrade

Approximately $295 million have been set aside for upgrades and repairs at John F. Kennedy Airport and an additional $150 million will go to LaGuardia Airport. Analyze the news alongside the $1.4 billion makeover that Newark Airport was the site of just a few years ago, and we dare say that New York will soon be on par with some of the most highly regarded travel hubs around the country. Let’s say it together: it’s about time.

2. Our water will (hopefully) be less contaminated

In an official press release, Senator Chuck Schumer has outlined the ways the state could use the money received from the historical law. When discussing New York’s water system, the Senator explained that he expects to replace lead service lines and address the issues caused by emerging contaminants. ¸

3. The Second Avenue subway line will expand

Yes, we know, we’ve been talking about the Second Avenue subway line for a century—and we’re back at it now. Although the line opened a while ago, plans to extend it have been stalled. Some of the money that the city will receive from the new bill will help resume those plans and extend the line to East Harlem.

4. Expect more electric car chargers all around town

A big portion of the package involves renewable energy and investments in electric cars. Overall, Americans will be delighted to know that a national network of electric car chargers is going to be put in place while plenty of public transportation options will be replaced by electric versions. Don’t be surprised when you see Tesla chargers along New York highways while you’re driving upstate. In total, the state will receive $142 million for these electric-related infrastructures.

5. You’ll see more elevators at subway stations

Clearly, our subway system is begging for an upgrade and, although we will likely still need changes to be implemented, the bill is a good start. You’ll see improvements all around but, among the specifics is a slew of new elevators all across subway stations.

6. You might start to enjoy riding Amtrak

Amtrak is set to receive a whopping $66 billion that will directly help finance the construction of new tunnels under the Hudson River. Some of that money will also fund competitive grants for a slew of other projects that have been in talks for years now.

Source: https://www.timeout.com/newyork/news/six-ways-the-new-infrastructure-bill-will-directly-impact-new-york-110921 

 

Mortgage rates are no longer at ultra-low rates below 3% as they were this summer, but housing analysts are reminding house hunters that borrowing costs remain relatively cheap. Freddie Mac reported that the 30-year fixed-rate mortgage averaged 3.14% this week.

“The yield on the 10-year Treasury note has been trending up due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates are also rising, but purchase demand remains firm, showing that latent purchase demand exists among consumers.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 28:

• 30-year fixed-rate mortgages: averaged 3.14%, with an average 0.7 point, rising from last week’s 3.09% average. A year ago, 30-year rates averaged 2.81%.
• 15-year fixed-rate mortgages: averaged 2.37%, with an average 0.7 point, increasing from last week’s 2.33% average. A year ago, 15-year rates averaged 2.32%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.56%, with an average 0.3 point, up from last week’s 2.54% average. Last year at this time, 5-year ARMs averaged 2.88%.

Freddie Mac reports average commitment rates along with points to better reflect the total upfront cost of obtaining the mortgage.

Source: https://magazine.realtor/daily-news/2021/10/29/should-buyers-be-scared-that-mortgage-rates-are-rising 

 

Chicago and New York City Areas Remain Most Exposed to Potential Impact of Coronavirus Pandemic in Third Quarter of 2021; Other Vulnerable Areas Spread Mainly Along East Coast; Housing Markets in West Region Again Less At-Risk

Published: Oct. 21, 2021 at 12:01 AM EDT|Updated: 15 hours ago

IRVINE, Calif., Oct. 21, 2021 /PRNewswire/ — ATTOM, curator of the nation’s premier property database, today released its third-quarter 2021 Special Coronavirus Report spotlighting county-level housing markets around the United States that are more or less vulnerable to damage from the ongoing Coronavirus pandemic still endangering the U.S. economy. The report shows that New Jersey, Illinois and Delaware had the highest concentrations of the most at-risk markets in the third quarter – with the biggest clusters in the New York City and Chicago areas – while the West remained far less exposed.

The third-quarter trends, which generally continued second-quarter patterns, revealed that New Jersey, Delaware and Illinois had 26 of the 50 counties most exposed to the potential housing-related impacts of the pandemic. They included eight counties in the Chicago metropolitan area, six near New York City, along with two of Delaware’s three counties. Three counties in the Philadelphia, PA, suburbs also made the top-50 list.

Elsewhere, the rest of the 50 most vulnerable counties were scattered mainly along the East Coast states. Among them, only Florida had more than three counties in the top 50.

Just two western counties, both in California, made it into the top 50 during the third quarter of this year, while the West again had the highest concentration of markets considered least vulnerable to pandemic-related damage.

Markets were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values and the percentage of average local wages required to pay for major home ownership expenses on median-priced houses or condominiums. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Rankings were based on a combination of those three categories in 570 counties around the United States with sufficient data to analyze in second and third quarters of 2021. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the three ranks. See below for the full methodology.

The third-quarter patterns, showing the most and least at-risk markets, emerged as the national housing market remained super-heated, continuing its decade-long boom, even as other major sectors of the U.S. economy only gradually rebounded from damage caused by the pandemic that hit in early 2020. Median single-family home prices continued soaring more than 10 percent on an annual basis across much of the country during the third quarter of this year, as homeowner equity kept improving.

A few signs of a possible slowdown have emerged recently in the form of declining home affordability, slumping investor profits and rising inflation. But the pandemic has started receding over the past month and the economy has continued growing, providing room for even more home-price increases.

Nevertheless, the pandemic remains a threat to the economy and the housing market as cold weather approaches and nearly half the U.S. population remains unvaccinated.

“There’s growing reason to think the Coronavirus pandemic may finally be heading into the history books as case numbers have dropped significantly in the past month or so. But it still poses a significant threat to the economy, with some housing markets in pockets of the country remaining at higher risk than others,” said Todd Teta, chief product officer with ATTOM. “It’s important to stress that this doesn’t mean that any one area faces imminent danger, especially given how well the housing market has avoided major problems during the pandemic. Rather, some are more at risk than others. We will continue watching prices, affordability, distressed property counts and other measures to gauge the risk, as long as the pandemic remains a big issue facing the country.”

Most vulnerable counties clustered in the Chicago, New York City and Philadelphia areas, as well as Delaware
Twenty of the 50 U.S. counties most vulnerable in the third quarter of 2021 to housing market troubles connected to the pandemic (from among the 570 counties with enough data to be included in the report) were in metropolitan areas around New York, NY; Chicago, IL; Philadelphia, PA; and in the state of Delaware.

They included eight in Chicago and its suburbs (Cook, De Kalb, Du Page, Kane, Kendall, Lake, McHenry and Will counties) and seven in the New York City metropolitan area (Essex, Hunterdon, Monmouth, Ocean, Passaic and Sussex counties in New Jersey and Rockland County in New York). The three in the Philadelphia, PA, suburbs were Camden and Gloucester counties in New Jersey and Delaware County in Pennsylvania. Kent County(Dover) and Sussex County (Georgetown) in Delaware also were among the top 50 most at-risk in the third quarter.

In other states, Florida had four counties in the top 50 list: Bay County (Panama City), Clay County (outside Jacksonville), Lake County (Orlando) and Miami-Dade County. Four additional counties in Illinois also were among the 50 most exposed to pandemic-related damage. They were Champaign County, Kankakee County (south of Chicago), Madison County (outside St. Louis, MO) and Saint Clair County (outside St. Louis, MO).

The only western counties among the top 50 most at risk from problems connected to the Coronavirus outbreak in the third quarter of 2021 were Shasta County (Redding), CA, and Humboldt County (Eureka), CA.

Higher levels of unaffordable housing, underwater mortgages and foreclosure continue in most-at-risk counties
Major home ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes consumed more than 30 percent of average local wages in 27 of the 50 counties that were most vulnerable to market problems connected to the virus pandemic in the third quarter of 2021. The highest percentages in those markets were in Rockland County, NY (outside New York City) (54.8 percent of average local wages needed for major ownership costs); Monmouth County, NJ (outside New York City) (45.7 percent); Passaic County (outside New York City), NJ (43.9 percent); Beaufort County (Hilton Head), SC (42.5 percent) and Kendall County, IL (outside Chicago) (39.5 percent). Nationwide, major expenses on typical homes sold in the third quarter required 24.9 percent of average local wages.

At least 10 percent of mortgages were underwater in the second quarter of 2021 (the latest data available on owners owing more than their properties are worth) in 37 of the 50 most at-risk counties. Nationwide, 8.9 percent of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Cumberland County (Fayetteville), NC (25.8 percent of mortgages underwater); Hardin County (outside Louisville), KY (25 percent); Kankakee County, IL (outside Chicago) (24.4 percent); Saint Clair County, IL (outside St. Louis, MO) (23.4 percent); and Madison County, IL (outside St. Louis, MO) (23.1 percent).

More than one in 2,000 properties had a foreclosure filing in the third quarter of 2021 in 36 of the 50 most at-risk counties. Nationwide, one in 3,019 properties had a foreclosure filing in Q3 2021. (Foreclosure rates have dropped about 80 percent over the past year amid a federal moratorium on lenders taking back properties from homeowners behind on their mortgages during the virus pandemic. The moratorium ended July 31 and foreclosures are expected to spike over the coming year.) The worst rates in the top 50 counties in Q3 2021 were in Jefferson County, NY (north of Syracuse) (one in 454 residential properties facing possible foreclosure); Cumberland County (Vineland) NJ (one in 548); Will County, IL (outside Chicago) (one in 676); Gloucester County, NJ (outside Philadelphia, PA) (one in 696) and Atlantic County (Atlantic City), NJ (one in 709).

Counties least at-risk concentrated in South and Midwest
Thirty-three of the 50 counties least vulnerable to pandemic-related problems from among the 570 included in the third-quarter report were in the South and Midwest.

Oregon had six of the 50 least at-risk counties, including two in the Portland metropolitan area (Multnomah and Washington counties) and five in Texas, including two in the Austin area (Travis and Williamson counties). Also on the list of least vulnerable counties were Clay, Jackson and Johnsoncounties in the Kansas City, MO, area; Arapahoe and Denver counties in the Denver, CO, metro area; Dakota and Hennepin counties in the Minneapolis, MN area; Davidson and Rutherford counties in the Nashville, TN, area and Henrico and Richmond counties in the Richmond, VA, area.

Others among the top-50 least at-risk counties with a population of 500,000 or more included Maricopa County (Phoenix), AZ; Dallas County, TX; Mecklenburg County (Charlotte), NC; Wake County (Raleigh), NC; and Erie County (Buffalo), NY.

Less-vulnerable counties again have lower levels of unaffordable housing, underwater mortgages and foreclosure activity
Major home ownership costs (mortgage, property taxes and insurance) on the median-priced single-family home consumed less than 30 percent of average local wages in 36 of the 50 counties that were least at-risk from market problems connected to the virus pandemic in the third quarter of 2021. The lowest percentages among those counties were in Kenton County, KY (outside Cincinnati, OH) (15.8 percent of average local wages needed for major ownership costs); Potter County (Amarillo), TX (15.8 percent); Jackson County (Kansas City), MO (17.4 percent); Saint Clair County, MI (outside Detroit) (17.4 percent) and Madison County (Huntsville), AL (17.6 percent).

More than 10 percent of mortgages were underwater in the second quarter of 2021 (with owners owing more than their properties are worth) in only one of the 50 least at-risk counties. Those with the lowest rates in those counties were Chittenden County (Burlington), VT (2.6 percent of mortgages underwater); Williamson County, TX (outside Austin) (2.9 percent); Lane County (Eugene), OR (3.3 percent); Washington County, OR (outside Portland) (3.3 percent) and Marion County (Salem), OR (3.3 percent).

Those with the lowest foreclosure rates in the bottom counties were Arlington County, VA (no residential properties facing possible foreclosure); Cass County (Fargo), ND (one in 40,944); Olmstead County (Rochester), MN (one in 32,690); Marion County (Salem), OR (one in 31,553) and Imperial County, CA (outside San Diego) (one in 28,845).

Report methodology
The ATTOM Special Coronavirus Market Impact Report is based on ATTOM’s third-quarter 2021 residential foreclosure and home affordability reports and second-quarter 2021 underwater property report. (Press releases for those reports show the methodology for each.) Counties with sufficient data to analyze were ranked based on the percentage of residential properties with a foreclosure filing during the third quarter of 2021, the percentage of average local wages needed to afford the major expenses of owning a median-priced home in the third quarter of 2021 and the percentage of properties with outstanding mortgage balances that exceeded their estimated market values in the second quarter of 2021. Ranks then were added up to develop a composite ranking across all three categories. Equal weight was given to each category. Counties with the lowest composite rank were considered most vulnerable to housing market problems. Those with the highest composite rank were considered least vulnerable.

Source: https://www.witn.com/prnewswire/2021/10/21/illinois-new-jersey-delaware-have-most-markets-elevated-risk-pandemic-fallout/

Home buyers are paying more in closing costs, but it’s mostly because they’re paying more to buy a home. Lenders are actually holding their closing costs down, a new report shows.

National average closing costs for single-family properties was $6,837 including taxes, and $3,836 excluding taxes, for the first half of 2021, according to ClosingCorp, a residential real estate closing data firm. Closing costs were up 12.3% and 10.5%, respectively, year over year.

Refinance closing costs rose to $2,398, a 4.87% increase compared to 2020, according to ClosingCorp data.

ClosingCorp’s calculations include lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys, and transfer tax.

“In the first half of 2021, buyers faced significantly higher home prices,” says Bob Jennings, CEO of ClosingCorp. In June, the average national price reached a new high of $373,664 and July marked the highest year-over-year gains, he adds. “Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on the property only increased by $400. In fact, closing costs as a percentage of purchase prices declined this year, going from 1.06% of the transaction in 2020 down to 1.03%. So, in addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control.”

The highest average closing costs, including taxes, for 2021 so far are in:

• District of Columbia: $30,352
• Delaware: $17,831
• New York: $17,582
• Washington: $13,910
• Maryland: $12,056

On the other hand, the states with the lowest closing costs, including taxes, are:

• Missouri: $2,102Origination: https://magazine.realtor/daily-news/2021/10/13/rising-home-prices-lead-to-105-hike-in-closing-costs

Real estate trends are always in flux. Here’s what you need to know about the latest happenings.

The housing market has been gaining strength in the last few years — particularly during the COVID-19 pandemic. Home values soared, buyer demand jumped, and mortgage rates hit historic lows. And ultimately, it’s made housing one of the few bright spots during an otherwise difficult time.

But the housing market is always in flux, and real estate trends come and go. Throw in that this industry is highly localized, with different conditions in every city, state, and metro area, and you can’t bet on things staying stagnant for long.

Fortunately, understanding the fundamentals of the market can help you stay on top of all these changes. Check out some of those fundamentals below, and scroll down for the most up-to-date real estate trends of the month.

Real estate prices

House prices are influenced by a number of factors, including local buyer demand and the amount of housing supply that’s available for purchase. Generally speaking, high demand and low supply cause housing prices to rise.

Mortgage rates can also play a role since they impact demand. When rates are lower, there tends to be more interest in buying homes. When rates rise, demand might wane a bit.

At the national level, home prices have been rising for some time. As of the end of 2020, the median home price was just under $347,000. Home prices jumped 11% across 2020 alone.

Housing affordability

Affordability isn’t just a result of house prices. Incomes, inflation, and interest rates also play a role. So rising prices? They don’t always mean homes are getting less affordable. If rates are particularly low or incomes are increasing, homebuyers might actually be able to afford more house than they could have previously.

Fortunately, that’s exactly the scenario we’re seeing today. When factoring in rates, income trends, and inflation, consumer house-buying power was actually up 21% by the end of 2020.

Interest rates

Mortgage interest rates play a big role in the housing market, impacting demand, home prices, and affordability. They also fluctuate daily based on a whole slew of factors, including Federal Reserve policy, the bond market, investor interest in mortgage-backed securities, and, of course, inflation.

In early 2021, mortgage rates hovered around all-time lows, according to Freddie Mac. The average rate on a 30-year, fixed-rate mortgage was just 2.74% in January, up from 3.62% the year before and 4.76% a decade prior.

Housing inventory

Housing inventory — or the supply of homes that are currently available for purchase — is another important factor in the housing market, too. When inventory is low and demand is high, it creates a seller’s market. Home prices rise, bidding wars erupt, and sellers have the upper hand in negotiations.

If inventory is high, on the other hand, buyers tend to have the advantage. In a buyer’s market, there are more available listings than there are buyers to purchase them. This slows down price growth and makes the market less competitive overall.

As far as today’s inventory goes, supply has been very low in recent years, and the coronavirus pandemic only worsened things. With sellers leery about having strangers in their homes — not to mention loads of economic uncertainty — the number of for-sale listings plummeted in 2020, at one point reaching its lowest level ever recorded. Listings have since recovered slightly but still remain fairly low. It’s possible widespread vaccinations will help loosen supply constraints and get sellers back on the market, but, of course, only time will tell.

Delinquencies and foreclosures

Mortgage delinquencies and distressed properties like foreclosures and REOs are another part of the market to pay attention to, especially if you’re an investor. Both of these tend to rise in times of economic hardship. (Case in point: During the financial crisis over a decade ago, there were around 3.8 million foreclosures.)

Housing market cycles and crashes

Real estate, along with the overall economy, tends to be cyclical. There are booms and busts, and as we saw with the housing crash back in 2007-2008, some of these extremes can get pretty bad.

Fortunately, most experts don’t think we’re nearing another crisis just yet. Though the economy is in a recession, there are a few key differences in today’s housing market versus those of downturns past.

For one, property owners have record levels of equity. Between Q3 2019 and Q3 2020, homeowner equity jumped by $1 trillion, and according to recent data, a mere 3% of properties have negative equity. This equity protects borrowers in the event their homes lose value, giving them a sort of buffer if the market turns.

Lending standards are also stricter than they once were, so homeowners likely have fewer debts and better credit profiles; overall, they’re more financially equipped to handle the mortgages they’ve taken out. On top of all this, there are low interest rates to consider. The Federal Reserve has committed to keeping the federal funds rate around zero until at least 2023. This should keep mortgage rates low and housing demand high for the foreseeable future.

 

Now that we’ve got those housing market basics out of the way, let’s dive into some more recent trends we’ve been seeing on the ground. Here’s what’s happening in the real estate market in October 2021.

1. Rents are skyrocketing

If you’re a landlord, it’s good news all around. The eviction ban finally ended, and rents are at record highs. According to Realtor.com, they jumped by 11.5% between August 2020 and August 2021, marking the first double-digit increase on record. Rents are even more expensive than starter homes in many American cities.

The average rent for the month clocked in at $1,633, up $169 a month. Two-bedroom apartments saw the biggest jump, at 12.3% over the year. Those rents now hover just under $1,830 per month.

2. Buying activity is slowing down

It seems competition is finally starting to wane. It might be the start of school, the threat of rising mortgage rates, or maybe buyers are finally getting burned out on the market. Whatever it is, it’s seeming easier to buy a home these days.

Existing home sales are down 2% for August, the first decline in over a year, and overall sales fell 6%. What’s more? The bidding war rate is the lowest it’s been all year. Currently, just over half of all buyers face a bidding war.

3. Home prices continue on their tear

Don’t let that dwindling competition fool you. Just because some buyers are stepping back doesn’t mean homes aren’t selling. They definitely are — and often at a premium.

According to the most recent House Price Index from the Federal Housing Finance Agency, national home prices are up over 19% as of July compared to last year. Between June and July alone, they rose 1.4%.

Homes in the Mountain division of the Census — which includes Arizona, Colorado, Utah, Idaho, New Mexico, Montana, Nevada, and Wyoming — saw the biggest jump in prices. Those are up a shocking 25.6%.

4. Foreclosures are rising

The foreclosure moratorium is officially in the rearview, and lenders acted fast. According to ATTOM Data Solutions, August saw a 27% jump in foreclosure filings — and that’s just compared to July. Over the year, they rose 60%.

Foreclosure starts were highest in California, Texas, Florida, Illinois, and New York, while New York, Chicago, Los Angeles, Houston, and Dallas topped the list of metros. If you’re a house flipper on the hunt for distressed properties, these should be the first places you look.

5. Mortgages are getting easier to come by

The Mortgage Bankers Association shows the mortgage credit availability is up, with a 3.9% increase between July and August. This essentially indicates the lending standards are loosening, making it easier to get a mortgage loan.

Credit availability is up the most on jumbo loans, which typically come with some of the most stringent qualifying standards. Conventional loans also saw a notable jump.

If that weren’t enough to get investors excited, there’s one more bit of mortgage-related news that might help. A few weeks ago, the FHFA announced it was rolling back policies that limited Fannie Mae and Freddie Mac‘s purchases of investment property loans. This should result in lower rates and fees on those mortgages moving forward.

The bottom line

The housing market is always changing. Be sure to check back in November for the latest trends and happenings in real estate.

Origination: https://www.millionacres.com/real-estate-market/real-estate-trends/real-estate-trends-guide/

Over the next few weeks and months, the long-overheated U.S. housing market is expected to continue to cool off in the bracing chill of autumn.

After a wild year of unprecedented price increases, a worsening shortage of homes for sale, and cutthroat bidding wars where offers six figures over the ask price weren’t uncommon, conditions are finally normalizing. More homes are expected to go up for sale this season just as many would-be buyers are either priced out or so fed up after losing out on home after home that they’re dropping out of the running.

“The fever in the housing market has broken,” says Ali Wolf, chief economist of building consultancy Zonda. “There have been buyers that have just been beat down for the last six months—and after losing so many homes and going through the emotional roller coaster, they’ve decided to stop searching for now. There are more homes on the market than there were six months ago.”

During the COVID-19 pandemic, record-low mortgage interest rates, below 3%, helped many homebuyers to absorb prices that reached all-time highs in the spring and summer. But prices rose so high so quickly that even bargain mortgage rates couldn’t offset them enough to give buyers some needed financial relief.

With more folks sidelined, some of the steam has been let out of the market. Prices aren’t rising by as much as competition is down and homes are taking a little longer to sell, giving buyers some breathing room.

In September, the rate of year-over-year growth was halved, to 8.6%, down from its peak of 17.2% in April, according to Realtor.com® data. This means the median list price of a home grew half as fast as in the spring. Homes also took a bit longer to sell, at about 43 days. While that’s down 11 days from the same month last year and 22 days from 2019, it’s up 6 days from June.

“Things are settling down. There will still be some multiple offers, but it will be less tense,” says Lawrence Yun, chief economist of the National Association of Realtors®. He expects the days of homes receiving 20 to 30 offers are becoming a thing of the past. “And some homes are lingering on the market for a week or two without an offer.”

This fall, buyers may once again be able to include contingencies in their offers, such as requiring home inspections and appraisals, and still win out bidding wars. They may even—gasp—get homes at the list price.

All-cash offers could also dip if buyers don’t need to cash out their savings, stocks, and cryptocurrency stashes to stand out from the competition.

“It’s not like the market is soft,” says Yun. “It’s just moving away from that extreme frenzy.”

The changes in the housing market may be coinciding with the seasonal slowdown. Typically, competition is fierce in the summer as families battle over larger homes in the suburbs, hoping to secure residences and settle in before the kids start school. Then the market slows down with less competition for the smaller homes that traditionally go up for sale.

Yun expects annual price increases will slow to a more normal level, around 5%, versus the double-digit price hikes that reigned earlier in the year. But this may not be true for every home in every part of the country.

“If you want a reasonably priced home in a desirable area, be ready to still face stiff competition,” says Zonda’s Wolf.

Will home prices fall?

The question on the minds of sellers, buyers, homeowners, and just about everyone else is whether prices might actually fall. Sorry, buyers, that likely won’t happen anytime soon.

The nation is still suffering from a severe housing shortage resulting in more buyers than there are abodes for sale. This is a continuing hangover from the Great Recession’s aftermath, when builders largely held off on building while investors bought up single-family homes and turned them into rentals. Meanwhile, the millennial generation is larger than the previous one, meaning there are more prospective buyers than there were a decade or so ago.

There’s plenty of pent-up demand for homes.

“You’ve still got a lot of young people who have still not bought a home but who would like to,” says Realtor.com Chief Economist Danielle Hale. “Anytime the market starts to cool, you’ve got people on the sidelines waiting for their chance to get in. That keeps both home sales and home prices from declining too much.”

She expects more homes to hit the market in October and through the end of the year. But it won’t be enough to ameliorate the problem of demand.

The nation is still short about 5 million homes, Hale says. As builders can’t get them up fast enough, she expects it will take between five and six years before there are enough homes for sale to meet demand.

New construction is beginning to pick up after months of builders contending with shortages in lumber, labor, materials, and appliances. While there are still delays compared with before the pandemic, there was about a 5% uptick in construction in August compared with July, says Zonda’s Wolf.

“Inventory is still very, very tight,” says Wolf. But “we’re up from the bottom. We expect to see a little more inventory trickle onto the market through the end of this year and into next year.”

Rising mortgage rates will likely keep high prices under control

Rising mortgage interest rates are expected to keep price growth in check: After all, buyers can afford to fork over only so much for their monthly housing payments. So if rates rise, buyers won’t be able to afford more expensive properties.

This could result in lower price growth, or prices going flat or even dipping a little in certain markets.

“Once mortgage rates push up a little bit, it’s going to combine with higher home prices to price people out of the market,” says Mark Zandi, chief economist of Moody’s Analytics. “Some markets could see prices go down a little, like in the most juiced markets. … [But] it’s not a crash.”

Rates are expected to top 3% by the end of the year and reach 4% by the end of 2022, says Joel Kan, an economist at the Mortgage Bankers Association. They averaged 2.88% for a 30-year fixed-rate loan in the week ending Sept. 23, according to the most recent Freddie Mac data.

Historically speaking, even 4% is still low. Over the past 20 years, mortgage rates averaged about 5%, according to MBA. The difference between a 3% and a 4% rate on a $380,000 home (the median list price nationally) was about $169 a month on a 30-year fixed-rate loan. That adds up to nearly $61,000 over the life of the loan.

“We’re expecting rates to increase moderately over the next 12 months,” says Kan. “As the economy improves, as the job market improves, typically that pushes rates higher. [But] there is a little bit more uncertainty now, given that we’ve seen the pandemic linger longer than we expected.”

How will the fall market affect home sellers?

While experts predict the housing market will remain firmly in the seller’s court, the days of picking prices out of thin air are likely coming to an end. The same goes for not making any improvements to a property (let alone having it properly cleaned) before listing it.

“Some sellers got a little too greedy or had a misconception about the market conditions,” says NAR’s Yun.

Zonda’s Wolf recommends sellers look at comps of other homes in their neighborhoods that have recently sold to get a realistic idea of what they can charge for their properties. They should also get their homes in tiptop shape. And while they may not get 20 offers like their neighbors may have received a few months ago, well-priced, move-in ready homes are in high demand.

“If you’re a seller today, you’ll likely still get top dollar, but you’re still going to have to put in the work,” adds Wolf. “Dust for cobwebs, stage the home, put on a fresh coat of paint.”

Origination: https://www.realtor.com/news/trends/is-housing-market-frenzy-going-to-cool-off-this-fall/