During the pandemic, housing inventory decreased sharply as potential sellers opted to keep their properties off the market and buyers were motivated by low mortgage rates. Thanks to high demand and low interest rates during each wave of the pandemic, home buying activity increased even as prices hit record highs.
Inventory in November was down 13.3% year-over-year from 2020 rates, according to Bill McBride in the CalculatedRisk Newsletter, and record low housing supply over the next several months will also lead to strong price gains ahead of likely another record-breaking year for the housing industry.
Each new wave of the pandemic has driven down interest rates, and that has made home buying more affordable (even as prices increased sharply). Making the assumption that the pandemic will be mostly over by mid-2022 (due to a combination of vaccines and therapeutics), we can make a few general predictions:
1. Mortgage rates will increase in 2022 (from the current 3.25% for a 30-year fixed rate), and this will make house prices less affordable. This should dampen some of the buying frenzy.
2. Sellers will be more willing to list their homes as the pandemic subsides, and price increases slow.
Advertisement
Related Stories
Planning + Development
How Finding Common Ground With NIMBY Groups Can Aid Workforce Housing Developers
Addressing early concerns and creating open conversation around a project can help developers through the approval process
Resilient Construction
Nonprofit Will Deliver 16 Homes to States Struck by Natural Disaster
An Illinois warehouse is being turned into the development hub for the project, which will build homes for struggling Appalachian families
High-Performance Homes
Georgia Gets Its First Passive House
With just one other PHIUS-certified house in the southeastern US, Georgia is the second state to build to the green, zero-carbon standard