2021 has been a strange time for the housing market. A severe shortage of homes coupled with a large amount of buyers lead to a Seller’s Market that changed the standards of submitting offers. You may be wondering how the real estate market is doing currently and how it may change going into 2022. Here are summaries published by the National Association of Realtors:
Nadia Evangelou on 12/2/2021 regarding mortgage rates:
“Mortgage rates remained relatively flat this week, despite rising concerns of the omicron COVID variant. According to Freddie Mac, the 30-year fixed mortgage rate slightly rose to 3.11% from 3.10% the previous week. These low mortgage rates continue to offer favorable conditions to homebuyers and homeowners who want to refinance.
In the meantime, the Federal Housing Finance Agency (FHFA) just released the new conforming loan limits for 2022. Due to strong prices gains, the conforming loan limit will be $647,200, which is an increase of nearly $100,000 from 2021. In high-cost areas, the new limit is 150% higher than the national level. Specifically, in these areas, the conforming loan limit will be $970,800.
What does this mean for homebuyers and homeowners?
This limit increase will help many homebuyers to get a conforming loan, securing a low interest rate. Thus, in most of the areas across the country, homebuyers will be able to get a conforming loan when they purchase a home up to $720,000, assuming a 10% down payment. Respectively, in high-cost areas such as San Francisco and the District of Columbia, homebuyers can purchase a home up to $1,078,670 with a conforming loan. Moreover, this increase in conforming loan limits will also benefit many homeowners who will be able to refinance their jumbo loan to a conforming loan, securing a lower interest rate. If they have a current jumbo mortgage with a balance up to the new limits, they can potentially qualify for a better conforming loan rate. Although rates will likely rise in 2022, they will continue to be historically low. NAR forecasts the 30-year fixed mortgage rates to average 3.5% in 2022.”
Lawrence Yun on 12/3/21 regarding jobs:
“The unemployment rate continued to plunge and is now at 4.2%, which is actually below March 2020 levels when the ugly COVID virus came to the country. This measurement should be taken with a grain of salt, however, since many Americans are not showing up in the statistics. Only those who are searching for a job are counted. A better measure of employment conditions is the total number of people with jobs. Only 210,000 payroll jobs were added in November, and we are still down by 3.9 million from the peak seen before the pandemic. Moreover, based on normal population growth and young adults entering the workforce each year in a hypothetical world where the pandemic did not happen, America should have around 8 million more jobs now compared to the current situation. The hourly wage grew by 4.8%, a tad lower than the consumer price inflation rate.
The construction of buildings and the trade sector added 23,000 jobs, implying that a supply of more homes is in the pipeline. Rental and leasing service jobs fell by 1,400, even though rental demand has picked up sizably. REALTOR® membership is at an all-time high and continues to rise. In fact, the overall number of small businesses, which are less trackable in the early stage of data collection, could be rising. That is, more Americans want to be entrepreneurs as 1.1 million reported having a new job, which is much higher than the 210,000 as reported by company payroll data.”
Finally, from an interview held between Quinton Simmons and Lawrence Yun published on 11/13/2021 regarding 2022 predictions:
“‘All markets are seeing strong conditions and home sales are the best they have been in 15 years, Yun said. ‘The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.’
An unknown, he said, is how remote work opportunities will play out in the future and advised that the industry keep that in mind.
‘We are only in the first innings of work-from-home options,’ Yun said. ‘People have not fully digested the work-from-home-flexibility model yet in determining home size and locational choice.’
Yun said even though there may be a decline in sales in 2022, he still forecasts home sales will outdo pre-pandemic levels. His prediction, he noted, is based on an anticipation of more inventory in the coming months. That supply will be generated, in part, from new housing construction – already underway – as well as from the conclusion of the mortgage forbearance program, which in turn will cause a number of homeowners to sell.
‘With more housing inventory to hit the market, the intense multiple offers will start to ease,’ Yun said. ‘Home prices will continue to rise but at a slower pace.’
Yun noted that some areas in the nation are thriving and are already fully recovered. This is the case for the respective job markets in places like Idaho and Utah. Both states have reported currently having more jobs now than at the beginning of the pandemic.
While real estate has thrived, Yun says there are signs that a more normal and predictable market is on the horizon. Home sales have surged over the past year in an uncharacteristic manner, many receiving multiple bids after only being on the market for a short period. However, the housing sector will settle down but at above pre-pandemic levels.”
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