Not all industries and business sectors were affected adversely during the pandemic. Anything linked to ecommerce would have enjoyed an uptick in sales. Similarly, most internet-based services also carried on as usual during Covid or saw a rise in conversions.
The housing market was one of the more unexpected winners in what was a torrid time for most businesses. Sales went up and were completed faster than normal. Property prices also rose.
While the pandemic is not actually over, normality has mostly resumed in the states, and the housing market has emerged from that period.
So, how is the housing market performing in 2022 as businesses start returning to normal? Can buyers expect prices to drop, or is it going to be a seller's market as demand hits new highs? And, is this the time to sell, or should you wait?
How did the pandemic affect the housing market?
The housing market saw healthier than normal conversions during Covid, but not necessarily because they had more buyers.
Part of what happened during the pandemic was that there simply wasn't enough property to meet the demand. Inventory dropped by more than 20% at some points which meant that potential buyers were scrambling to make offers before houses were sold. Put simply, demand started to outstrip the supply.
This meant quicker and higher levels of sales than any time in the previous 14 years. The demand also pushed up the average price of housing to record levels. This year saw an all-time high when median house prices broke the $400,000 barrier.
While the rise in sales and valuations was good news to realtors and sellers, it has had a knock-on effect as the market moved into 2022.
Is the market slowing now the pandemic is over?
Statistics show that as of the middle of 2022, house sales are starting to drop significantly. Current data reveals housing sales have dropped by over 8% from last year. This could be the result of inflation, higher interest rates, and those sky-high house prices.
Housing affordability has become a great concern at present. It looks like the demand during the pandemic has helped to create a housing market that has forced out many younger or lower-income families and couples.
Attom Data's research shows a major drop in mortgage approvals. This could mean fewer people are looking to buy at the moment, or a combination of that plus stricter lending conditions.
Due to the Great Recession and the housing market bubble bursting, lenders use much stricter controls when deciding on application approvals now. The minimum credit score for loan approvals is 620, but you will have a better chance of approval with a score of 740 or over. In 2019, the median credit score for mortgages that were approved was 759. This could explain the significant drop in housing loan approvals in 2022.
What if you need a quick sale now the market is slowing?
A slow market isn't the news that sellers will wish for, but it isn't necessarily doom and gloom. House prices are not expected to drop just yet, so homeowners can be satisfied with their investment as long as they can be patient.
The housing market is still looking very healthy, and sales are continuing to happen. While the market may have slowed somewhat, there are options other than realtors for those needing a quick sale.
Property investors and cash buyers such as https://cashhousebuyersusa.com continue to purchase homes from those needing quick sales. The chances of realizing the full potential of your property investment are low with this sales method, but the time frame for completing is much shorter.
There are other options including housing auctions, but the fastest and only guaranteed selling method is through a property investor using cash.
What can a seller expect when selling a home now?
A seller could expect their realtor to market their home at a higher price than last year. But, they should perhaps expect the sale to take a little longer than in 2021.
Mortgage rates are affecting sales, and first-time buyers are struggling to afford homes. The costliest US zip code has homes with a median value of $7.5 million today. Even homes in regular neighborhoods are out of reach for many people.
Thus, many younger individuals and couples are looking at renting as another option.
Is it a better time to rent now than to buy?
Sellers need buyers, and when the mortgage rates rise too much some people will turn to the rental sector. Of course, inflation affects landlords too, and now rental prices are also soaring.
Some states such as Texas have seen a 121% rise in monthly rents on one-bedroom properties. This could possibly push more people towards investing in a home instead of renting.
Is housing affordability going to dampen house sales?
There are very few signs of there being another housing bubble bursting as in 2007/2008. Yet, housing affordability is a serious concern in 2022, and it is likely to have a big impact on house sales.
House prices have risen quicker than at any time in the last 4 decades. That isn't just a statistic affecting the USA, it is a global concern for anyone wishing to get on the property ladder.
Now that the demand seen in the pandemic has started to slide, anyone selling a house may find it a lengthier process. House prices are showing no sign of dropping, so with fewer mortgage approvals and fewer buyers, sellers may need to approach different avenues.
In conclusion, house rates will continue to rise at a possibly slower rate, and so will interest rates. This will lead to a continued trend in slower house sales.
How will the rest of 2022 pan out for housing sales?
One area to feel positive about is the mortgage rates. Although they are rising, they are still relatively low at the moment, but they may not stay that way. Yet housing market experts are divided about how 2022 will fare.
Some individuals in this sector believe that the housing market will remain strong, but many others see it flattening out in the last quarter. Predictions include mortgage rates heading over 6%, an increase in renters, tighter lending requirements, and more mortgage defaults.
This could mean that anyone needing a quick house sale will have to look to other routes instead of realtors.
Across the world, inflation is rising, and this is affecting the housing market as well as the cost of living. Mortgage rates are rising, and while they are still at fairly low levels, there is the risk of them becoming a concern especially surrounding housing affordability.
House sales post-Covid are proving to be slower than at any time in the last two years, and the continued rise in property prices is another concern. Buyers are struggling to get mortgage approvals as conditions have tightened. And, first-time buyers are finding themselves locked out of the market.
It would seem that house sales will flatten towards the end of the year, and anyone selling a home urgently may need to look for another route. If mortgage defaults rise then there may be a rise in repossessions or urgent sales to cash buyers and property investors.