Real estate agents are aware of the surprising strength in the housing market in the face of the pandemic and global economic disruption in recent years. In fact, home prices were up for the 122nd consecutive month in March on a year-over-year basis, according to the latest report from CoreLogic, a real estate data analytics firm. Nationally, home prices were up 20.9% in March 2022 compared to March 2021. The National Association of Realtors reported that 70% of metro areas saw double-digit price appreciation in the first quarter of 2022 compared to the first quarter of 2021.
If you work with sellers, price appreciation is great news. For buyers, the rapid rise in home prices has been less joyful. Inflation and rising mortgage rates have cut into affordability for many buyers and especially hurt first-time homebuyers who may struggle to find a home within their price range. Mortgage rates rose more quickly than expected above 5% in late April. Still, many markets remain affordable for many markets, despite what the headlines say, according to AEI Housing Center.
While current mortgage rates are certainly not the rock bottom rates of 2021, higher rates often are an indication of a thriving economy, which translates into higher wages.
Silver linings for the housing market
There’s plenty of good news to go around for the housing market. For one thing, housing experts anticipate that the lack of homes for sale and higher rates may return the U.S. to a more normal market with price appreciation expected by CoreLogic to be 5.9% year-over-year by March 2023.
More inventory is anticipated to arrive in the market, which means buyers may face a little less competition. Newly built homes are adding supply, with permits for new construction up 6.7% in March 2022 compared to March 2021 and housing starts up 3.9% year-over-year. New supply is anticipated to ease the strain on the market and allow for move-up buyers to sell their homes and make more room for first-time buyers.
Those first-time buyers include millennials, who are reaching their peak homebuying age and are the largest group of home buyers. Millennials are eager to become homeowners and now account for 43% of all buyers, according to NAR. More good news: the household wealth of millennials doubled from $4.55 trillion in the fourth quarter of 2019 to $9.13 trillion by the end of 2021, according to the Federal Reserve.
While housing market trends can be unpredictable, one thing that’s completely predictable is the value of a Cinch home warranty. Your buyers and sellers will know they can count on a vetted network of repair providers and that they can save money on repairs. Contractors can be in short supply in many areas, so it pays to have access to trusted servicepeople. Learn more at cinchrealestate.com.