House Buying Trends For 2021 And Beyond
2021 was a record year for house buying and selling. In addition to continued low interest rates, the market saw a combination of pent-up demand combined with a low supply of homes for sale due to the pandemic. This led to unprecedented offers well over the asking price and a general frenzy among buyers and sellers alike. Everyone in the home-buying market is wondering what 2022 has in store for homeowners.
Interest rates
Interest rates continue to be a driving force in the real estate market. Rates have been low for several years, but 2021 saw them continue to drop. In fact, interest rates dipped just below three percent multiple times in 2021 for 30-year mortgages and hovered around two percent for 15- and 20-year mortgages. Getting a low interest rate on a home loan allows buyers to have a smaller mortgage payment each month, which could make home-buying accessible to more people.
Availability
Housing inventory, or the number of homes for sale in any given month, was also at record lows in 2020 and 2021. This was largely due to the pandemic and the economic uncertainty it caused in the early stages. As the Covid-19 vaccine became available and public health organizations continued to gain a handle on the pandemic, more and more buyers ventured out to buy a home. Sellers, however, remained wary. This led to an imbalance, with more buyers than there were homes for sale.
2022 is expected to be much more balanced in terms of buyers and sellers. Experts state the housing inventory in the United States is expected to grow throughout 2022.
Price
In real estate, the law of supply and demand is pretty simple. When you have more buyers than available houses for sale, the price will go up. 2021 is the perfect example of that. In fact, 2021 was supply and demand on steroids.
Real estate markets in big cities like New York City and San Francisco have always had robust competition. The lack of available homes caused a frenzy in almost all housing markets across the country. From big cities to rural areas, everyone wanted to buy, but there were not enough houses to go around. Reports are circulating that within hours of listing their home for sale sellers were receiving multiple offers over the asking price, even 1 million dollars over the asking price.
Reach out to a professional for more insight into the home-buying market.
