As most of us know and have seen on the news, the real estate market is appreciating at a record pace. Why is it happening? Well, for one, there is a real lack of inventory in the market (houses for sale). Two, interest rates are at or near historic lows and lastly the pandemic and the fear of what might happen to our freedoms, jobs, etc…have all played a part in creating the market we are in right now.
Let us break this down a bit. When the Pandemic hit in the beginning of 2020 the real estate market was moving along pretty well, though there was a minor lack of inventory it wasn’t anything like we are seeing now. As the panic and shutdowns began to hit, many people planning on selling their homes decided not to put them on the market for fear of Covid. This decision by millions of potential sellers led to severely reduced inventory. On the other side, the Federal Reserve continued buying bonds and suppressing rates. This policy only picked up and widened when Covid hit. Therefore, interest rates were at or near historic lows and buyers could qualify to pay more for homes. The lack of inventory and the low rates led to a perfect storm of price appreciation untenable in the long term.
Our outlook for 2022 is one of guarded optimism. Assuming we can get through Omicron relatively quickly and get back to some assemblance of normalcy as we approach the spring market, we anticipate that many of the sellers that stayed on the sidelines through most of Covid will finally begin listing their homes. With the fear of interest rates going up and house prices leveling off or dropping, sellers will want to take this last chance to sell before this happens. Our hope is that this will begin to increase the inventory of homes for sale and push as many buyers into the market as possible, with the hopes of still getting a great rate and having a better chance of finding and buying a home.
