If you’re a home buyer, you may have hoped that the real estate market might freeze up a bit in 2022 to allow breathing room in a less competitive market. Unfortunately, that doesn’t appear to be happening.
While it is early in 2022 the real estate market is starting off just as competitive as 2021′s.
While buyers were active in the market in January, the number of homes for sale continued to lag well behind demand. The number of active listings on the market — which includes any home listed for sale, not just those that are recently listed — was down 28.4 percent in January 2022 compared to January 2021. It decreased 60.4 percent compared to the number of active listings in January 2020. New listings, which are those first placed on the market during the month, were also down by 9.1 percent compared to January 2021 and by 17.9 percent compared to January 2020, nationally.
That imbalance between demand and supply contributes to the rapid increase in prices. The median listing price was up 10.3 percent in January 2022 compared to January 2021 to $375,000, which represents a 25 percent jump over the median listing price in January 2020.
While both buyers and sellers are usually slow to enter the market in January, this year’s sellers appear to be the only ones waiting to get into the housing market. Beyond seasonality, other factors that seem to create hesitation among sellers are concerns about potential coronavirus surges and the shortage of homes.
Sellers typically buy their next home, so they face that same lack of inventory, especially because new homes aren’t being constructed fast enough to meet demand.
Price appreciation is anticipated to slow a little later in 2022 while interest rates are expected to rise. One reason buyers may be in the market and competing heavily now is the desire to buy before mortgage rates increase again.
What we are not currently expecting is any decline in home prices. As long as inventory stays low and Buyer demand remains high, home prices are likely to stay firm.