Newsletter - April 2022
Virtually every real estate firm predicted that home price growth would slow down this year, but just a few months in, that consensus has fallen apart.
Home prices surged an unsustainable 18.8% last year, fueled by a depleted inventory and record-low mortgage rates. But with interest rates on the rise, pundits predicted the growth in home prices would cool off—at least a little—in 2022.
Zillow originally forecast an 11% increase in home prices this year, while other firms were even more conservative: Fannie Mae’s prediction was a 7.9% increase and Realtor.com predicted 2.9%. The Mortgage Bankers Association actually forecast a 2.5% drop.
But as mortgage rates climbed in January, homebuyers scrambled to get their offers in before further rate increases. According to Redfin, January was the most competitive month on record: that month, 70% of home offers written by their agents faced bidding wars.
Zillow has since updated their prediction for home prices in 2022 to rise 17.3% (after hitting a peak of 21.6% in May). Fannie Mae now predicts an 11.2% jump year over year.
In March, the average 30-year fixed mortgage rate hit 4.42% up from 3.11% in December—the biggest jump since the 1990s (though still low by historical standards). While we’d normally expect increasing mortgage rates to tamp down home prices, this isn’t a normal housing market. Stubbornly scarce inventory continues to drive up prices—and first-time homebuyers out of the market.
February inventory was down 25% from February 2021 and 48% from February 2020, thanks to continued demand from the cohort of Millennials who have hit the traditional first-home-buying age of 30. Making matters worse, the backlog of new homes approved for construction is at an all-time high as builders struggle with supply-chain issues.
At some point, rising home prices and mortgage rates are bound to cool down this red-hot housing market, but it seems less and less like it’s going to happen this year.
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Employee Of The Month
“Congratulations Nat for winning Employee of the Month! Nat has recently become the Team Lead in our Document Retrieval & Recordings Department. Nat is a natural when it comes to assisting other team members in Document Retrieval and other departments when the need arises. Nat makes sure our clients are top priority ensuring their work is handled correctly and on time. Nat handles several products for document retrieval and is a vital part of the recordings team. Nat is thorough and detailed when processing walk-in recordings, E-Recordings, handling any rejections that are presented to us ensuring the client is aware, the documents are corrected and recorded quickly. Nat is a true team player, and we are so lucky to have on our team. This award is well deserved. Congratulations, Nat!”