Thanks to ongoing sellers’ market conditions, finding homes for sale in Estes Park and elsewhere in the country has been challenging. Over the last 12 to 18 months, real estate markets around the U.S. have been undergoing one of the strongest sellers’ markets in recent memory. Spurred by the pandemic, low mortgage rates, low inventory levels, and strong demand, the real estate market has been a nightmare for buyers for some time. Could that be changing in 2022?
Recent reports highlight factors providing glimmers of hope for buyers in the upcoming year. Here are the three most pertinent examples:
1. The Market May Be Cooling Down a Little
Some signs point to cooling real estate market conditions that could continue into 2022. According to a report by Redfin, the real estate brokerage, there was a 6% drop in home sales in August 2021 versus in August 2020. Similarly, the National Association of Realtors reported a “measurable decline” in pending sales over the past summer.
Cooling market conditions are likely attributable to high home values, which have risen steadily throughout the pandemic. Because of these skyrocketing prices, many buyers have been pushed out of the market entirely. In turn, demand has declined. Accordingly, sales should too.
Supply is still far from meeting demand, but the odds are good that market conditions will be less frantic in 2022. More buyers will be able to look, and they won’t feel as much pressure.
2. Inventory Levels May Be Improving
Housing inventory levels have been at or near historic lows across many U.S. markets for some time. However, according to a September 2021 real estate market report covering the country as a whole and its top 50 real estate markets, more properties have been listed for sale over the last several weeks.
Indeed, real estate listings increased by 5% in August 2021 versus August 2020. In areas like Cleveland, Ohio, they’ve shot up by as much as 20%. If this trend keeps up, we could see improved inventory levels in 2022 – and that should make things easier for buyers.
3. Home Price Growth May Be Slowing Down
Finally, the incredible appreciation of real estate values over the last year or so can’t continue forever. For the last 12 to 18 months, home values have shot up with alarming speed across many markets. In places like Boise and Austin, home values increased by more than 30% — a rate unlike any seen over the last several decades.
These skyrocketing values have forced many would-be buyers out of the market entirely. However, the trend is not sustainable, and there have already been signs of value increases slowing – or even leveling off – in many areas.
Researchers at Freddie Mac, for example, expect home prices to rise more slowly in the upcoming year. Home values rose by 12.1% in 2021, but the firm expects them to rise by a more moderate 5.3% over 2022. If this proves true, more buyers will be able to enter the market, and they’ll have more options in general.