by Marc Dosik
Guest Contributor, Sponsor

January 2022: This month may end up being the most competitive January housing market in recorded history, according to Redfin. The median home sales price surged to an all-time high. The number of homes for sale fell to a new low. Mortgage rates edged up. Yet homebuyer activity jumped. Buyers are pouring into the market to claim a house before mortgage rates rise again.

2021 in Retrospect: If the 2021 housing market was a shock, get ready for even more of the same in 2022. As a quick recap, the pandemic bought the inventory of available homes for sale to a 40-year low. Sellers were extremely hesitant to put their homes on the market and decided to wait. At the same time, low interest rates enticed homebuyers to shop for the few homes that were available. This created a perfect storm of low supply and high demand. The result was terrific for sellers and challenging for buyers.

Bidding Wars: They hit an all-time high—with 72% of homes getting multiple offers in April 2021. And that frenzy saw home appreciation climb to the highest level in tabulated history. Houses sold extremely fast. As a result, many would-be homebuyers were unable to buy a house in 2021. For the upcoming Spring season, bidding wars are likely to continue.

Low Inventory: The number of homes actively listed for sale fell to a record low at the end of November 2021. Zillow predicts that even with more listings in the Spring and Summer of 2022, there will probably not be enough to meet the demand.

Higher Home Prices: Housing experts at CNBC forecast that buyers can expect the 2021 trends will continue: low inventory, higher prices, and very fast turnaround. Zillow predicts home values will rise by 11% in 2022 — not as much growth as in 2021, but still substantial.

Interest Rates: The Federal Reserve is expected to raise interest rates a few times in 2022, which means mortgage rates will likely rise. Both Redfin and Realtor.com predict a 30-year-fixed mortgage rate will reach 3.60% by the end of 2022, compared to an average of 3.30% now. The silver lining to rising rates is that there will be fewer buyers, thus less competition.

Buyer Demand: Fortune Magazine predicts that rising mortgage rates could actually make the housing market even more competitive in the short term. Potential homebuyers could see this as their last chance to snag pandemic-spurred low mortgage rates, and they might begin to pour into the housing market in the coming weeks. Millennials (ages 26-41) are aging into their first-home buying years. And a rush of homebuyers into a market with already depleted levels of inventory would be a perfect storm for another spike in bidding wars.

What the Experts Predict: Experts unanimously agree that the Spring season will be at least as competitive for buyers as last Spring. And they offer this advice to buyers: When buying a home in the next year or longer, it will be important to watch new listings, including ‘coming soon’ listings, and be very prepared to not only visit the home quickly, but prepare to decide and extend an offer almost immediately.

Please contact me if you have questions about buying or selling.

Marc Dosik
Associate Broker
Fed City Team at Century 21 Redwood Realty
843 Upshur St NW, Wash DC 20011
CallTheFeds.com

202.543.7283 - o
301.910.9976 – c
marc@callthefeds.com