As we move into 2022, one thing is clear…today’s real estate market is one for the record books.
The exact mix of conditions we have today creates opportunities for both buyers and sellers.
Home values are appreciating at rates we have not seen since the housing boom nearly 15 years ago.
At the same time, there is a general shortage of homes for sale across the nation. This has led to prevalent bidding wars, as homebuyers struggle to purchase a home before prices go even higher.
Let’s take a look at today’s real estate market and how it will affect you as a home buyer (and seller).
4 Main Developments
- Home Price Appreciation
- Shortage of Available Homes
- Purchase Competition and Bidding Battles
- Rise in Home Equity
Let’s take a closer look at these 4 factors…
Home Price Appreciation
Over the past year, we have seen incredible home price appreciation throughout the US. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices have increased over 18% year-over-year!
This creates a great opportunity for current homeowners to tap into that equity via a cash-out refinance to make other investments or pay off more expensive consumer debt.
It is not at all unexpected that rising home values are a big part of why real estate remains one of the top investments. For potential sellers, it also means it is a great time to list your house to maximize the return on your investment.
Shortage of Available Homes
In 2021, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels gradually began to trend up.
According to the latest Monthly Housing Market Trends Report from Realtor.com, newly listed homes have grown by nearly 5%. This isn’t fantastic news for buyers, but the trend is heading in a positive direction.
However, even though we are experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states.
This would still be considered a “seller’s market”, giving current homeowners a good deal of control if/when they decide to put their house up for sale.
Purchase Competition and Bidding Battles
Today’s low supply combined with high demand creates a market with buyer competition and bidding wars.
Purchasers are being forced to become aggressive to make sure their offer stands out from the crowd by offering over the asking price or waiving some contingencies.
The number of offers on the average house for sale broke records last year. As a matter of fact, last year’s Confidence Index from the National Association of Realtors (NAR) stated that the average home for sale received at least five offers!
For buyers, the best way to put a convincing offer together is by working with your local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what is most appealing to the seller.
Rise in Home Equity
The final key trend we see in today’s real estate market is the rise in home values and equity. One key thing to consider:
The equity in a home does not just grow when a homeowner pays their mortgage — it also increases as the home’s value appreciates.
Due to this increase in appreciation, homeowners across the country are seeing record-breaking gains in home equity.
This is clear when looking at CoreLogic’s recent reports that indicate homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year-over-year!
Again, this has produced a great opportunity for current homeowners to tap into their home equity. They can do this with a cash-out refinance to make home improvements, other real estate investments, or pay off higher balance consumer debt.
If you are considering purchasing a home, conditions are a bit challenging because of low inventory, but the rewards can be substantial, as the housing appreciation is expected to continue into 2022!
Contact me to discuss becoming a homeowner or pulling out some equity in your current home, as it would be my pleasure to help you!