I am asked all the time "how is the market?" and "do you expect a slow down?" Since I don't have a crystal ball, I am constantly seeking valid resources that help me to answer these questions as best I can.
According to Danielle Hale, Chief Economist with Realtor.com, home sales are expected to continue to increase another 6.6% and home prices are expected to continue to see an increase average of 2.9%. This extreme slow down from 2021's 18% average home price increase is still an indicator of a solid housing market. A slight increase in mortgage interest rates will certainly play a role as affordability will be a top focus for home buyers, but rents are expected to continue to rise another 7.1%, driving potential homebuyers who are currently renting to position themselves to be homeowners. New construction is predicted to increase another 5%, but with continued supply-chain issues and labor shortages, new construction will continue to see price jumps and extended build times.
Millennials and even Gen Z buyers (now in their 20's) will continue to gain footing in the home ownership arena. In the wake of Covid, employers and employees alike have found value in remote work options and this has brought an increased interest in suburban areas and given some flexibility to buyers. Mortgage interest rates are expected to slowly rise over the coming year which certainly impacts affordability, so consumers are expected to seek areas where their mortgage dollars can go a little further. Growth of suburban areas will continue to be impressive.
Interestingly, according to Oisin Hanrahan, CEO of Angi, homeowners making improvements and major repairs to their homes are seeing a great return on the investment when selling due to the continued shortage of homes. For the first time in recent history, homeowners investing in their own property claim to be doing so to meet buyer needs and demands. Bidding wars (multiple offers) on homes are not expected to cease in the foreseeable future.
The housing market in 2022 is expected to continue to be extremely strong overall. Home sellers can be confident that selling will yield an excellent return and buyers will need to be prepared to be competitive in offering to purchase. Susan Wachter, real estate professor at the Wharton School at the University of Pennsylvania, notes that with inflation at a 40 year high, we will see an increase in interest rates, but she does not see it having a negative impact in the coming year as demand is still incredibly high. She also notes that Texas, Florida, Arizona and North Carolina will continue to outpace the nation in new home sales.
Milford Adams of the Denver Metro Association of Realtors, along with other market experts predict that stabilization of the market will take much longer than the three years recently suggested among the experts. Further, says Adams, consumers will need to continue to have a great deal of patience whether purchasing new or pre owned homes and to have a plan in place for competing in this exciting market.
As always, Transcend DFW Properties will continue to closely monitor out Texas market and provide our clients with the most current market insight when making real estate decisions. Our agents invest a great deal of time staying abreast of best practices that will position our sellers to realize the greatest possible profit when selling and keep our buyers competitive in this intense market.
-- Happy New Year! Jeannie Holland, Broker/Owner at Transcend DFW Properties
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