Yesterday was the first official day of spring. As we jump into a new season, we anticipate many things—holidays, the weather, and in our industry—what we can expect in terms of real estate trends. A year ago in Lee County real estate, median and average sales prices were up, homes were selling faster and inventory was down. Now, a year later, we’re seeing much of the same! Shifting to national trends, Fortune Magazine made a few predications for the 2022 spring housing market, which we’ve summarized here.
Low inventory is staying low.
According to Fortune, the onslaught of diminishing housing inventory happened around summer of 2020, when first-time millennial home buyers were taking advantage of record-low mortgage rates. This time last year, inventory was down 32 percent compared to before the pandemic.
Wishful thinking among industry experts was that inventory would have started to climb back up by now, as people timid about selling their homes during the pandemic would have shed those fears with readily-available vaccines. Conversely, the numbers show that is not the case. In fact, inventory is tighter now than this time last year, with levels 42 percent lower than they were in January 2020.
Bidding wars will dominate.
Tight inventory means sellers have the upper hand, and for buyers that means anticipating bidding wars. According to Inman.com, there were more bidding wars in January 2022 than any time during the pandemic. They cited a stat from Redfin stating 70 percent of home offers their agents dealt with faced bidding wars, up from 67.1 percent in December 2021 and 60 percent in January 2021.
Predictions for the 2022 spring housing market are that bidding wars will continue. That’s because all the factors are still in place (low inventory and high prices) to make it so.
Home price growth isn’t slowing.
Home price growth doesn’t look like it’s slowing any time soon, despite fall predictions by Fortune anticipating that it would. Zillow predicts the year-over-year home price growth rate to peak at 21.6 percent in May, with a 2022 year-end growth rate of 17.3 percent. Zillow increased these figures just two months into the year after gauging January and February’s numbers.
Rising mortgage rates will have varying effects on the speed of the market.
Mortgage rates are rising. On the date this blog was posted (March 21, 2022), the 30-year fixed mortgage rate was 4.881 percent. That’s compared to 3.11 percent in December 2021.
The way rising mortgage rates are predicted to affect the housing market heading into spring depends on whether you are considering the short- or long-term, according to Fortune. In the short-term, it could further excite the housing market. That would happen if people jump in now in anticipation that rates will continue to rise. In the long-term, it could slow the market, as some would-be buyers say, “No-thanks,” to higher rates.
Summary
These predictions for the 2022 spring housing market have us expecting much of the same that we have been experiencing. Whether you’re ready to leverage your power as a seller or you need help navigating the market as a buyer, Ryan Roberts is more than willing to assist! Reach out to Ryan through his contact form. For more about real estate trends and local happenings, keep browsing the blog!