Official numbers to shed light on the housing market in spring
The real estate industry has entered 2022 with a clear understanding that the market will be different from the one seen before. Spring is often considered a peak season in this sphere, but what to expect in 2022? If you remember the situation in the market in 2021 at this time period, it was characterized by a tough bidding war in over 70% of home listings. Can you expect to see the same now? Probably, yes. Furthermore, some experts predict that this spring may become the hottest period of home purchases since the bidding wars percentage is climbing up again.
Recent statistics show a significant increase in the number of deals closed at the beginning of spring. The market has gone crazy and it makes the situation stressful both for home sellers and buyers.
All this happens despite a quite impressive growth in the home prices. The numbers have soared by almost 19%, but the competition is still really tough.
The predictions made at the beginning of the pandemic period said about a crash in the real estate market, but the result was different. Summer 2020 was a sweet time for first-time millennial buyers who took advantage of the incredibly low mortgage rates. It has led to the domination of demand over the available inventory. This trend has gone tougher in spring 2021 when only two-thirds of all inventory listed before the pandemic has left. The lack of homes encouraged buyers to offer more than the original listing price and resulted in real bidding wars.
Some real estate experts believed that the beginning of 2022 would be characterized by an increase in the inventory number. The hope was on elderly sellers who were afraid to enter the market and participants of the COVID-19 mortgage forbearance program. This prediction was partially true since the listings became more numerous at the beginning of the fall but only for a couple of months, unfortunately. January 2022 could experience a drop of around 42% in inventory in comparison with the previous year. Therefore, the spring housing market will surely beat the record of last year too.
It is a perfect time for sellers who plan to sell homes and don't need to buy anything instead, while buyers have to struggle for every deal and be patient enough to catch at least anything.
The changes in prices have also puzzled experts who made predictions for the upcoming year. Many of them believed in their deceleration in 2022, but the truth is different. At the end of the year, Zillow made a prediction for 12 months and concluded that the price growth will be around 11% by the end of the year. However, in January the number reached 16.4% and it is expected to grow up to 21.6% in May, so this year may finish at a record-high level of 17.3%. Tight inventory is the main reason for such conclusions!
One more aspect worth consideration is mortgage rates that keep on growing too. At the end of the year, the fixed mortgage rate for 30 years was at the level of 3.11%, but in April it has already reached 3.92%. This growth may decrease the number of buyers but it can also have an opposite effect: more buyers will try to close the deals while the rate hasn't increased more.
As you can see, three aspects including a shortage of inventory, rising prices and mortgage rates will surely make the spring housing market red. Therefore, consider these facts before making a decision about a real estate deal not to get into a trap!