2021: Home Buying Year in Review—Plus, the Year Ahead
If you bought a house this past year or know someone who has, you know that these are unusual times in the real estate market. With the low inventory of existing homes and supply chain issues slowing new builds, 2021 has been a seller’s market. Homebuyers are faced with fewer houses to choose from which often resulted in bidding wars and purchase prices going well over the asking price. In addition, tech-powered brokerage Redfin reports that all-cash house purchases have risen to roughly one-third of all home purchases in 2021. And as any buyer knows, it’s difficult to compete against all-cash offers.
According to the National Association of Realtors (NAR), there were 6.46 million transactions in November 2021, with a median sales price of $353,900 and 2.1 months of inventory. The median sales price has increased by 13.9 percent year over year, while inventory has decreased by 13.3 percent since November 2020.
With a projected 6 million existing-home sales in 2021, the housing market performed better than it has in 15 years.
So What’s Ahead for 2022?
Existing-home sales will fall to 5.9 million in 2022, according to Lawrence Yun, NAR’s chief economist and senior vice president of research, as mortgage rates rise modestly. As the pandemic's supply chain backlogs clear, he predicts a small uptick in home starts to 1.67 million.
The Federal Reserve is expected to raise interest rates by a quarter-point twice in 2022, according to more than 20 leading economic and housing experts.
NAR also indicates that housing prices are predicted to rise 5.7 percent next year, while inflation is expected to rise 4%, both lower than in 2021.
BusinessInsider.com reports that according to new data, the property market pandemonium of 2021 is giving way to a more typical buying climate. The gap between buyer demand and market supply is narrowing, but only slowly. While economists predict that prices will continue to rise next year, the housing market bubble is expected to peak in 2021.
Seasonally, prices have dropped even more substantially. Mid-December, the average price of the most typical home in the United States fell to $337,000 from $340,000. According to housing economist Ralph McLaughlin, the latest average is now $26,000 behind the record of $363,000 in 2021, the greatest seasonal disparity in statistics dating back to 2012.
(Prices normally decrease as the market cools as the holiday season approaches, thus comparing the seasonal decline to those witnessed in previous years reveals that the correction is higher than expected.)
All in all, it looks like 2022 will be a better year in which to buy a house. If you’re looking to build a new one, supply chain issues will slowly show signs of resolving. And if you’re fortunate enough to be an all-cash buyer, you’ll be in the best position to buy in the new year.
And when you’re ready, we hope to hear from you! We know the mountains like no one around!
Existing-Home Sales Housing Snapshot. (n.d.). www.nar.realtor. Retrieved December 26, 2021, from https://www.nar.realtor/infographics/existing-home-sales-housing-snapshot.
Langone, A. (n.d.). What to Expect from the Housing Market in 2022: Another Sellers’ Market. CNET. Retrieved December 26, 2021, from https://www.cnet.com/personal-finance/what-to-expect-from-the-housing-market-in-2022-another-sellers-market/.
Leading Economic and Housing Experts Predict Multiple Fed Interest Rate Hikes, Slowing Inflation and Home Price Growth in 2022. (n.d.) www.nar.realtor, 15 Dec. 2021, Retrieved December 26, 2021, https://www.nar.realtor/newsroom/leading-economic-and-housing-experts-predict-multiple-fed-interest-rate-hikes-slowing-inflation-and-home-price-growth.
Winck, B. (n.d.). It’s Looking More and More Like 2022 is a Much Better Time to Buy a House — with One Big Catch. Business Insider. Retrieved December 26, 2021, from https://www.businessinsider.com/housing-market-cooling-easier-buy-house-inventory-prices-inflation-cooling-2021-12.