Housing market inventory could peak in summer 2022 | Ezine Daddy

A desert for sale

A severe shortage of properties for sale over the past 18 months has made finding a home in 2022 quite a challenge.

It can feel like every time you find a listing that meets your needs, your listing is buried under a pile of competing bids.

However, stocks usually recover by the end of summer. And significant growth in mortgage rates in 2022 could help bring back that typical seasonality.

By late summer and early fall, there should be a surge in listings for shoppers to look forward to.

Will there be more houses on the market in 2022?

In a normal year, homes for sale peak sometime between July and September. While recent history has been anything but normal, 2022 could be headed in that direction.

“A late summer or early fall inventory spike is the most likely scenario given how the market has returned to normal seasonal trends in 2021.”

–Jeff Tucker, Senior Economist at Zillow

According to a Realtor.com report, about 64% of prospective home sellers plan to list their properties by the end of August. Even better news: 43% of sellers expected prices below $350,000 — the range most first-time buyers aim for — and 22% expect a listing between $350,000 and $500,000.

len pineDeputy Chief Economist at Freddie Mac

“Buyers have been embarrassed because the property market is so hectic and how fast homes are selling. I expect we’re getting a much more typical seasonal pattern this year; People start listing in the spring and of course the activities are heating up too. Then the houses that didn’t sell in the spring and summer are on the market and there you see the stocks recovering.”

Danielle HaleChief Economist at Realtor.com

“Our forecast is for inventories to rise between 0% and 1% this year. We could see a slower pace of selling in the fall because rising mortgage rates are pushing up housing costs so much. It may even result in a slightly larger than usual rebound in inventory for sale.”

Jeff Tuckersenior economist at Zillow

“A late summer or early fall inventory spike is the most likely scenario given how the market has returned to normal seasonal trends in 2021. The stock of existing homes on the market is finally starting to fill up again as our March data now shows total stock rising sharply.”

The Interest Factor

Mortgage rates skyrocketed through early 2022, reducing buyer affordability. And it’s not as if the market was bargain-packed before — as house prices have risen by double-digit percentages annually in each of the last 12 months, up 20% in February, according to CoreLogic.

The meteoric rise in mortgage rates works both for and against rising inventories. Some potential sellers might choose to stay put if they find the new interest rates unfavorable. However, the higher acquisition costs should lower demand and reduce market competition.

Daryl FairweatherChief Economist at Redfin

“The higher interest rates will result in a lock-in effect for homeowners so they may not be listed. And it could also reduce demand from homebuyers, especially for people who are really price-sensitive.

But the market should slow down and that means houses will be for sale longer and therefore more inventory will accumulate. Similar to previous years, inventories are likely to grow around the third quarter.”

len pineDeputy Chief Economist at Freddie Mac

“While the fundamental question of whether there is enough housing for the land is likely to take a couple of years, those rates could ease the stock for sale a little sooner. We haven’t seen anything like this very rapid increase in rates in the last 20 years. They totally messed up people’s selling and buying plans.

The equation of where prices and interest rates fall makes it harder for buyers to think they could default — especially as they digest how much payments have increased over the past month.”

Will the housing stock ever recover?

Low inventories are unbalancing the housing market and have given sellers the upper hand in recent years. However, there could be a silver lining for buyers.

“A 74% share of industry experts believe the market will return to pre-pandemic stock levels by 2024.”

–Zillow House Price Expectations Survey in March

According to Zillow, the supply of homes for sale averaged 1.6 million units per month in 2018 and 2019, but fell to around 1 million in 2021. Based on a survey conducted by the company in March, 74% of industry experts believe the market will return to pre-pandemic stock levels by 2024.

Danielle HaleChief Economist at Realtor.com

“We will start this year to take a step in that balanced direction. It’s going to take a few years just because the vacant lot is so big and we still have so many young households, so there’s a lot of demand.

The market will eventually reach equilibrium, it just won’t happen overnight. We have to build more. At the end of 2021, the US was short of 5.8 million single-family homes. This essentially means we are five years behind on construction.”

len pineDeputy Chief Economist at Freddie Mac

“Given the launches and permits, I would expect that housing construction is probably more than two years of production away from filling the gap. I think it’s going to be hard work to really rebalance the housing market.”

Why isn’t the market recovering faster?

The main reason for the shortage of stock is the slowdown in construction of all types of housing over time. Today’s supply chain issues and municipal zoning laws are delaying the completion of new lots and restricting the opening of more lots.

However, the construction figures are also pointing upwards. In its March forecast, the Mortgage Bankers Association estimated 1.71 million housing starts for 2022 and 1.79 million for 2023, compared to 1.6 million in 2021.

Jeff Tuckersenior economist at Zillow

“The Great Recession and subsequent housing deluge ushered in a decade of underdevelopment that has now caught up with us. Although builders are firing on all cylinders to complete homes, they are grappling with supply chain issues that are causing the construction process to take longer than usual.

Addressing these shortages would help, but even then, builders would have years of work ahead of them to meet the demand for new homes. Relaxing restrictive zoning laws could have huge payoffs here — allowing ADUs and in-laws suites in single-family neighborhoods, and allowing “fund-missing” options like duplex and triplex units, if implemented widely, could significantly increase housing supply.”

Daryl FairweatherChief Economist at Redfin

“Basically, we need more apartments. We cannot rely on existing homeowners to turn back because when they sell they put their home on the market and add to the supply, but they buy back and add to the demand.

The real source of the increase in supply would come from new construction. We need to make it easier for people to build and also remove some of the bureaucracy around it. Much of this is controlled at the local level. It means that many local communities are changing their stance from a pro-housing stance to a pro-housing, pro-growth stance.”

Advice for home buyers in 2022

Trying to buy a home now is difficult given the rise in prices and mortgage rates and the lack of homes for sale.

Of course, there are many success stories and programs that you can use to strengthen your buying position. There are reasons to be positive when the housing market develops.

Danielle HaleChief Economist at Realtor.com

“Higher costs will make home buying more difficult. Shoppers need to get creative, maybe look further into the suburbs, or maybe consider cheaper subways than before.

Most buyers tend to try to complete their home purchases in the summer, with August being the end of this mass moving season. So the best time for buyers is usually autumn, because sellers who advertise then are usually a bit more willing to negotiate. But I wouldn’t necessarily pause search plans. My advice is if you find a home that fits your checklist and fits your budget, make an offer.”

Daryl FairweatherChief Economist at Redfin

“The market is changing so definitely be careful if you overbid and think there is more competition than there really is. It will take time for the housing market to really feel any different, but pay attention to how many people are bidding on houses.

If you were in a bidding war against one person, your strategy would be a little different than if you were in a bidding war against a dozen people. And I think the market is shifting from very, very, very hot to very hot and maybe just transitioning to hot later this year. So keep track of your local housing market.”

Home buyers, stay ready to act fast

Bottom Line: Be as prepared as possible so that when the right listing appears, you’ll be ready.

Check your mortgage eligibility and contact a local lender so you know what type of loan is best for you and how much home you can afford.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for the products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policies or position of Full Beaker, its officers, parent companies or affiliates.

Leave a Comment