The housing market is very complex and shares close ties with the U.S. economy. Even the slightest shift can have implications for home buyers and Real Estate agents.
Read more to learn what experts are saying about the housing market in the new year.
Housing market now
Coinciding with the pandemic in 2020, supply chain shortages and lack of new builds made it difficult for buyers to find new homes in 2021.
COVID-19 has played a major role in impact spending and production. At the start of the pandemic, building materials were bought up early as homeowners were eager to start home renovations.
Meanwhile, new products could not reach stores. Either because they weren’t being produced or because of backups in the supply chain.
This low supply and high demand created a strong seller’s market, which led to higher home prices. And even though houses cost more, bidding wars became normal.
With this high competition, homes were selling in a matter of days or even hours. This gave sellers the upper hand.
However, buyers continue to engage with the market since lower mortgage rates and remote work made homeownership a possibility.
The future of supply and demand
Experts agree that the housing market will continue to favor sellers. They expect the demand for homes to outpace the supply for some time.
Changes in economic conditions are already affecting buyers. For example, lumber prices went up as demand for building material outpaced supply.
However, according to Kuba Jewgieniew, CEO of Royalty ONE Group, lumber prices are expected to stabilize over the next year which will make building new homes affordable for many people.
This relationship between supply and demand will continue to be the main predictor of how things will turn out.
However, as income increases and employment rates move back to normal levels, the market should begin to balance out.
Interest rates & consumer confidence
Another factor predicted to change the market is the adjustment of interest rates by the Federal Reserve.
The housing market is sustained through a system of loans and interest rates, flowing down from the federal level.
When inflation is high, the Federal Reserve raises interest rates, which affects home loans.
Higher mortgage rates mean buyers will have to pay more for homes. This could discourage buyers and slow things down.
Another factor that affects the market is consumer confidence. When people are optimistic about the future, they tend to invest in long-term goals, like houses.
According to Kuba Jewgieniew, consumer confidence and investments are growing as the pandemic era evolves.
The housing market in 2022
The housing market has been ever-changing over the last two years. The pandemic highlighted how all changes influence the opportunities available to home buyers and investors.
However, the market’s relationship with the economy offers hope for 2022. Supply and demand should balance out over time.
This balance will eventually turn to favor buyers again in the future. In the meantime, sellers can make the most of this time in history.
Are you selling your home and reviewing several offers? It’s important to recognize that top dollar shouldn’t be your only consideration. Here’s everything you need to know about choosing the best one. Determine your preferred financing method As a seller, you...
So, your house is on the market, and you have interested buyers. Can a potential buyer send someone to inspect your home without consent? Read more to learn the ins and outs of inspections as a seller. Homeowner rights Whether or not you’re selling your home, you have...
Why is home maintenance so important? It’s easier and cheaper to do than it is to repair a home. If you’re all about saving time and money, check out this handy checklist of home maintenance tasks to tackle this New Year. Post-holiday cleanup You’ve had all your fun -...
If you’re looking to rent, filling out a rental application is an essential part of the process. So, what determines if you qualify? Read more to stay ahead of the curve and in the know of the most common and unexpected reasons your rental application can be denied....
Winter is typically a slow time for home sales. But will that be the case this winter? Not quite. If you’ve written off the idea of selling your home until spring ’22, think again! Read more to learn a few things you need to know about selling your home this holiday...
If buying a home is on your holiday wish list, Santa might be able to deliver this year. With some help on your end, of course. Read more to learn why house shopping this Christmas season might finally be your chance to score your dream home. Bidding wars are cooling...