The U.S. real estate market has weathered the effects of the pandemic and is expected to be less extreme in 2022 than in 2021. Mortgage rates remain at historical lows, helping to increase the population ready to purchase property, including existing homeowners who decided to move for better options or renters believing it was the right time to jump into the market. Low or stopped homebuilding activity adds to housing inventory at unprecedented lows. This low supply compounds the high demand of 2021, which raised housing prices on average by at least 15%.
Some cities experienced even more significant price increases:
Our expectations for the housing market in 2022 include a slowing trend of homeowners moving locally. While not completely finished, residents needing a home suited to their needs (such as having a spare room for working from home) have for the most part already moved. While builders offer new construction, wait lists and delays for parts and materials will continue to affect delivery. Mortgage rates will rise and home prices may continue to escalate, making home buying less affordable for some people.
Companies that offer home sale benefits will probably see more amended sales and a reduced risk of homes falling into inventory. We are also seeing companies permitting the initial list price to be above the previously recommended maximum of 105% of the average of the two Broker’s Market Analysis (BMA), which allows homeowners to obtain the best price possible as markets continue to experience price increases.
On the flip side, home purchasers may still compete against multiple offers, especially customers with cash, while new construction delays are prevalent. Do not permit your transferees to bypass inspections; this can cause only heartache.
A silver lining is that this housing market is very different from 2008 and experts do not believe Loss-on-Sale provisions need to be added to mobility policies at this time.