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Housing Market Forecast

February 26, 2022

US Housing Market

The United States housing market is experiencing growing pains. In some regions, big influxes of migrants and millennial aged buyers, housing supply is falling far short, and what’s available is in the upper price levels.

The new release of housing market stats from NAR reveals sales across the US actually rose in January 2022. That sales growth represents an increase of 6.7% from December’s sales number to a new seasonal rate of 6.5 million.

Conversely, the inventory of unsold existing homes dropped to a new all-time low of 860,000, which equates to to 1.6 months supply.  Median prices of resale homes rose strongly at a 15.4% clip, year-over-year, to $350,300. It does point to rising prices in the spring as the economy more fully opens and America returns to normal.

 

Total resale home sales chart. Screenshot courtesy of NAR.

US Median Home Sales price history. Screenshot courtesy of NAR.

Rental Market Experiencing a Squeeze

You can read more on the rental market, however February’s report from Zumper showed rent prices are still on an upward trajectory driven by low availability. Affordability in the rental space is a big issue confronting renters and landlords. Their February National Rent Index has reached new all-time highs at $1,393 (1 bedroom) and $1,708 (2 bedroom). Major metros and California cities showed strong rises in rent prices.

The challenge for home buyers across the nation is intense, and many will be forced to rent for a long time. That’s grow demand for rental houses and in the built to rent market.  It’s growing the rental sector and paving the path for new property management companies.

The overflow from the “need to buy a house” demographic will drive house rental prices up. The huge influx of immigrants is a factors not discussed, yet there are millions not adequately housed. They will need landlords and rentals.

Rent Price Growth. Screenshot courtesy of Zumper

NAR Housing Market Report for January

Median existing-home price for all types of homes in January rose 15.4% YoY to $350,300. January’s rise was the  119th consecutive rise in MoM price increases, which continues the longest-running price rise streak in US history.

NAR’s chief economist Lawrence Yun said “There are more listings at the upper end – homes priced above $500,000 – compared to a year ago, which should lead to less hurried decisions by some buyers.

Yet Yun notes that affordably priced homes are in severely short supply from California to Florida to New York. Florida is seeing high price growth with bidding wars.  Research shows only 18% of homes were purchased by investors, many of whom are entering the rental housing market.

First time buyers accounted for 3% fewer sales than last month showing rises prices and rates are are an issue for younger buyers.  Yun added that “First, some moderate-income buyers who barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage. Second, consumers in California and the New York City metro area, will face an additional $500 to $1000 in monthly payments due to rising rates.”

With fewer buyers bidding on homes it may reduce prices until the summer buying season. Given the Covid pandemic is ending, buyer demand may be very brisk this year, if the Fed decides to go easy on rate hikes.

Regional Home Sales

In the Northeast region resale home sales rose 6.8% in January, an annual rate of 780,000 homes, yet this was 8.2% decline from January 2021. Median prices of homes in the Northeast rose 6.0% to $382,800 vs one year ago.

Resale home sales in the Midwest rose 4.1% from December 2021, to a new annual rate of 1,510,000 in January, which home prices jumped 7.8% from last January 2021.

The Southern region saw sales jump 9.3% in January vs December. That rate of 2,940,000 homes sold is a slight rise of 0.3% from 12 months ago. The median home price in the South rocketed 18.7% to $312,400 year over year. Demand for homes in the Southern US has been hot given continuing strong migration trends to the sunbelt.

In the Western region, home sales increased 4.1% from December to the new annualized rate of 1,270,000 in January.  This was down 6.6% from one year ago. Home prices in the West rose strongly by 8.8% to a new median prices of $505,800.  See more the California housing market report.

Single Family House Sales

Single-family home sales jumped 6.5% to a seasonally adjusted annual rate of 5.76 million in January, yet this is still 2.4% less than January 2021.  The median resale single-family house price rose 15.9% YoY to $357,100 in January.

Existing condominium and co-op sales leapt up 8.8% to 740,000 units in January. Yet that is 1.3% lower than one year ago. The median existing condo price rose 10.8% to $297,800 last month YoY.

Shrinking Home Supply Effect

Properties typically remained on the market for 19 days during January, down slight from the 21 days in January 2021. 79% of homes sold in January 2022 were for sale for less than one month.

Shrinking supplies and lower mortgage rates are elevating price pressure.  The most recent new homes sales report from the US Department of Commerce said sales of new single‐family houses in December 2021 were at a seasonally adjusted annual rate of 811,000 units, up 11.9%  above the revised November rate of 725,000. However, this 14% lower than the 943,000 new homes sold in December 2020.

Housing permits are on the rise again this year, however completions are lagging due to labor, Covid shutdowns and materials issues.

New Home Construction Stats. Sceenshot courtesy of Census.gov

 

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Strong consumer confidence and lower rates (3.72% for 30 year fixed rate mortgage) are encouraging buyers to buy higher priced homes.

Enjoy all the insight and data from Hud, NAR, US Census Bureau, NAHB, Trading Economics, Freddie Mac, Attom Data Solutions, Zillow, from today’s most credible housing information sources.

See the city housing market reports for San Jose, Los Angeles, San Francisco, Phoenix, Chicago, Denver, Oakland, HonoluluLas Vegas and for California’s housing market. See below for mortgage rate forecasts and discover the full benefits of the best property management software.

Is This the Right Time to Buy a Home?

If you’re hoping to time the purchase of a home, are deciding on whether you should buy a second home or rental income property, feel uncertain about the economy, and mapping out your future, you’ll find these real estate market insights valuable.  It may be the right time to buy in most cities, while in some, perhaps not.

In this well viewed chart from Zillow Research, you can see an upward trend in home prices. Zillow calls the market hot and expects average home prices across the country to reach $250,000 next year.

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Housing Price Changes Over Time

Nationally, there are some surprises in housing prices.  In this chart, courtesy of Kiplinger research, prices in San Jose have jumped 130% since the recession bottom, while Denver, Seattle, San Francisco, Los Angeles, and Las Vegas home prices have doubled as well. Honolulu, New York, Boston, and Washington are a few cities that haven’t seen a full recovery.  Property investors: please check out the best online property management software that smart individual investors are using.

CityMedian Home Price% Change Since Peak
% Change Since Bottom
San Jose, Calif.1,100,00048.8130.1
San Francisco, Calif.860,00022.4127.4
Los Angeles, Calif.634,0006.191.6
Honolulu, Hi.600,00043.353.5
Oxnard, Calif.589,000-5.869.6
San Diego, Calif.545,0004.484.1
Seattle, Wash.430,00047.1110.7
New York, N.Y.-N.J.410,000-438.1
Boston, Mass.410,00014.357.2
Denver, Colo.383,00066.3100
Washington, D.C.-No. Va.375,000-13.937.5
Sacramento, Calif.375,000-6.8115.5
Portland, Ore.370,00039.386.6
Bridgeport, Conn.356,000-18.624.7
Riverside-San Bernardino, Calif.339,000-14.7100.3
Stockton, Calif.335,000-19.4135.4
Modesto, CA295,000-20.8136.4
Austin, Texas290,00081.180
Colorado Springs, Colo.280,00034.760
Las Vegas, Nev.266,000-20.9137.1
Providence, R.I.262,000-14.569.5
Boise, Idaho260,00026.1121.7
Salt Lake City, Utah255,00068.5101.1
Miami, Fla.255,000-17.1103.4

 

Property Management: if you’re a Realtor, Landlord or Property Manager, please see our posts on multifamily, rental property markets, and on trends in Proptech, growing asset value, and adopting cloud software and automation, improve your property income strategy and investment ROI.

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Mortgage Rates Today


Today, The Bank of America was offering 30 year fixed rate mortgages at a rate of 3.375% for a suggested monthly payment of $884.  Their 5/1 ARM variable rate is currently at 2.875%. With a further interest rate cut, more homes could become affordable for buyers.

Without inflation, it’s difficult for the FED to inflate the rates which would also jump up mortgage rates.  The red is expected to cut rates in the fall and that’s music to the ears of everyone in property management and residential real estate.

30 year mortgage rate history to day. Screenshot courtesy of FRED.

The Big 4 Housing Market Factors

The economy, jobs rate and wages, low mortgage rates and rising housing availability are the 4 key factors which will influence the housing sector in 2022. Wages have risen along with the prices of lumber and other materials. Construction labor shortages, housing regulations, and energy costs are all up and contributing to higher new home prices.

In the buying vs renting question, the weight is in favor of buyers and rental investors, because mortgage and lending costs are so low.  Rent increases are outracing home prices so the buy vs rent question is a tough one for some Americans.

New Housing Needed

Lawrence Yun, NAR’s key rep says “more homes need to be built” yet despite continuing low lending rates, builders confidence does seem to be there. Building permits rose slightly in May to 269,000 units. Permits for the multi-family housing sector dropped 5% to 479,000 units.

New homes sales USA. Screenshot courtesy of Census.org.

According to Census.gov, here’s the most recent new building stats:

⦁ Building Permits: 1,294,000
⦁ Housing Starts: 1,269,000
⦁ Housing Completions: 1,213,000

USA housing building permits. Screenshot courtesy of Trading Economics.

Should I Buy a Home This Year or Wait?

Buyers and renters are asking whether they should buy now or wait. Their decision is one thing, yet mortgage financing will have the biggest impact on whether renters can become buyers. Low mortgage rates and rising income will cause many to take the home buying leap, this summer.

Is it a Good Time to Buy a Home?

  • low interest and mortgage rates
  • American buyer wealth growing
  • new housing construction dropping
  • lots of new construction being released
  • recent economic data is positive
  • more housing stock available
  • high rent prices

The chance of a housing crash is so minimal given low mortgage rates, tight supply, high employment, and excellent economy.

Millennials Driving the Market

Sales numbers from Freddie Mac and Fannie Mae, show most loan originations are from Millennials who are finding more starter homes to buy. With more Millennials hitting their family forming, home buying years, they’re outpacing even Generation X’s previous record home buying numbers. Millennials took out 45% of all mortgages last year.

Best Cities to Buy a Home?

The stats show mid-sized cities across the nation are growing in popularity, with improving economies and migration. These locations may give resistant sellers (Generation X and Babyboomers) a destination to move too. That’s an important factor for homeowners.

Check out the Phoenix housing market, Las Vegas Housing Market, Denver Housing Market, Chicago Housing market, Oakland housing market, New York housing market, and the Honolulu housing market for conditions in those cities.

Grow your property revenues and commissions with a property management software solution that makes it so easy.

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