The housing market has faced competitive prices in the last year. And everyone is wondering where this historically competitive market will go next.
In 2021, home prices surged almost 19 percent, which makes it the highest annual jump in recorded history. The S&P CoreLogic Case-Shiller National Home Price Index released a report on Tuesday (Feb 22). According to Fox Business, the report showed December’s year-over-year gain hit at 18.8%. And that’s the largest annual price spike they’ve seen since 1987.
“This is the highest calendar year increase in 34 years of data, and substantially ahead of 2020’s 10.4% gain,” S&P DJI managing director Craig Lazzara told Fox.
The managing director also stated that more data will be required for them to understand the current demand. “In the short term, meanwhile, we should soon begin to see the impact of increasing mortgage rates on home prices,” Lazzara added.
Berkshire Hathaway Agent Recommended Buyers Build a New Home Rather Than Rent
A Real Estate agent from Berkshire Hathaway, Shannon Bartling said building a new home would be the best idea given the state of the market. Buyers would have less competition, rarely any inspections, and the sellers can close when they want to. Currently, all of the delays are holding people back from purchasing homes. Bartling predicts interest rates will go up next year. So, people should start looking to buy as soon as possible.
With interest rates on the rise, competition in the housing market remains incredibly high. This is because home buyers are more willing to make larger deals on their dream house.
Last December (2021), existing homes declined, but rose by 6.7 percent in January. This left behind the lowest recorded inventory rates. Now, the percentage of first-time buyers dropped to 27 percent last month, which is 30 percent lower than December’s rate.
Housing Prices Are on the Rise For Buyers in the Spring
An economist at Zillow, Alexandra Lee explained how the spring buying season will look in 2022 in more detail. “It is a hint to us that perhaps the spring homebuying season is coming early,” Lee stated. We would usually expect the winter months to still be relatively slow. But with this reacceleration and understanding just how hot the market has remained over the last year, the housing market is starting to heat up earlier than usual.”
So, will the housing market ever calm down?
Experts have told home buyers to not count on an end to this competitive market anytime soon. “We have to level out before we even see light and I doubt that happens this year,” Lloyd Fox told Fox 29. “The demand is just too high for things to cool off.”