Is 2022 the year we see house prices fall in the US ?
There is a lot of anticipation over what will happen with house prices for the remainder of this year, inflated prices and rising interest rates have some experts concerned that another housing crash might be on the way. Last year we seen huge increase in house prices even-though there was a global pandemic. This was all brought about by very low inventory levels and low interest rates which actually led to bidding wars in some States, according to Freddie Mac prices overall rose by 16.9% We can not predict exactly what will happen this year but so far the housing experts are saying it looks things are going to stay the same, low inventory levels, more prices rises and fast sales time, the Sellers market continues for another year. Bob Pinnegar the CEO of the National Apartment Association has stated that affordable housing is still going to remain a key issue this year. Supply chain delays and continued inflation will also impact every facet of the industry, from property managers to renters to owners. But there is one factor we need to take into consideration before concluding 2012 is another bull market and that is mortgage rates. The Federal Reserve is shifting policy to help slow down inflation which will result in higher mortgage rates. We already seen that the average 30 year fixed mortgage rate jumped to 3.56% in January, one of the biggest jumps in nine years. So the big question is will a rise in mortgage rates bring down pricing in this coming year or is they’re still such a shortage of housing that this will not make any difference ? Daryl Fairweather, Redfin chief economist, says, “I expect mortgage rates to slowly rise to 3.6% by the end of 2022.” This, he says, is because the Fed is tapering mortgage backed security purchases and we’ll feel the effects in mortgage rates. Dr. Lawrence Yun, the chief economist at the National Association of Realtors (NAR), forecasts the 30-year fixed mortgage rate to increase to 3.5% by the end of 2022. But even with these increased mortgage rates we need to bear in mind that housing supply is now at its lowest level since the 1970s, due to millennial homeownership and other factors such as rising building prices. And even though the mortgage rates are rising they are sill historically low. Already this year home sales in the U.S. rose in the first month of 2022, while the number of homes for sales was at a record low. House sales jumped 6.7 percent in January 2022 from a month earlier, the highest rate in 12 months, according to the National Association of Realtors (NAR). Zilllow the online marketing company say the housing market may not reach the incredible heights of 2021, but they expect it will be anything but slow. Zillow’s forecast calls for 11 percent home value growth in 2022, down from a projected 19.5 percent in 2021. It expects sales of existing homes to total 6.35 million, up from an estimated 6.12 million in 2021. The Zillow economists say the market forces that have given sellers the upper hand over the past two years or so (tight supply after years of underbuilding, remote work, U.S. demographics and low mortgage rates) will all persist again this year. They expect bidding wars on many homes, especially as the market heats up during spring and summer. Sue Yannaccone, chief executive officer and president of Realogy Franchise Grouphas said Real estate is entering a new era. The pandemic-fueled frenzy we saw over the last 24 months is giving way to a new kind of real estate market – one that will be driven by solid and sustainable demand which have not seen for a long time. The changes to Americans’ working and living behavior are also compounded by demographic shifts giving way to a new generation of homebuyers. Making up the largest share of new home buyers in the U.S. and entering their 30s and 40s at a growing rate, Millennials are finally getting off the sidelines of the housing market. So overall it looks like 2022 will not be as crazy as 2021 but there is still no reason for prices to fall anytime soon. In fact you are prepared to enter the housing market 2022 is a great year to do this, the market is more stabilised than 2021 but still prices are increasing. If you would like anymore information on our great US properties please email invest @globalinvestmentsincorporated.com
