*Study: Homeowners gained $3.1T in equity last year, prices rose at a rate not seen since 2013, inventory dropped by 24% and 58% of buyers faced a bidding war.
Using the past as our base line, we can make some projections with a modicum of certainty. If inflation stays under control, the mortgage rates remain under 4.5%, and consumer confidence stays strong; we could continue to still see growth in the housing market through 2022. Supply should continue to be a sticking point for the market. Foreclosures being held off the market and builders lagging behind in demand should also aid in keeping the market hot.
On the builder note--the difficulty of obtaining material, coupled with the rising cost of material, will most certainly make new construction a challenge for buyers moving forward. Many spec builders are currently changing their purchasing processes. The builder will now take a lot, chose a popular plan for that lot, and proceed to dry in stage. The builder will then, and only then, allow buyers to place a contract on the home. What this does is allow the builders, is to control their costs by setting the price of the home based on the current material cost--not what the costs are when they begin the permit process.
Pre-existing home inventory should rise into the spring and summer at their typical rate, which will also bring much needed inventory to the market. The higher home prices could also entice some to list their home, or their investment property, that were not originally thinking of selling, but will be drawn into the market by the money. This could also work in reverse, however, with some sellers holding off upsizing because of the increase putting larger homes out of their budget.
So, with the all-time low interest rates, if you are buyer in the market...take advantage of this historically low rate. If you are a seller--with the rise in prices--it's a great time to take advantage of all that equity you have built up. If you think you have been priced out of the market remember no market lasts forever it is cyclical.
Plum Tree Real Estate Marketing