10/18/2022
2022 HOUSING MARKET OUTLOOK- Part 2
Another good sign for those looking to buy is that housing inventory is finally starting to improve. The number of homes on the market dropped sharply during the pandemic, which is part of what led to rising prices, but there are currently more active listings on the market than any point since late summer 2020 (but still below 2019 numbers), and this appears to be a consistent trend across the country.
The issues builders and realtors are dealing with are real. Because interest rates have increased this year, and home values have also increased, individual buying power is lowering. In some markets, the change in a mortgage payment for the same house has risen 32 – 47% for many buyers in certain areas.
As a result of these changes, more buyers are being more cautious. Some builders have seen their share of homebuyer's remorse. Contract cancellations steadily increased between February and June, and a higher percentage of deals have fallen through since the early days of the pandemic. This means fewer incoming sales, which means more time and money lost as pricing is lowered, and some homes going unsold and into the rental market.
For first-time buyers, it is getting harder to buy a home. Across the country, first-time buyers have seen mortgage payments increase to 25.6% of household incomes, the highest in three years. For example, first-time home buyers in California’s four largest cities have the biggest gap in income and affordable housing. This is where that 32% or more mortgage increase really adds up for first-time buyers with no equity from a previous home.
Any headwinds can be a cause for concern. Heading into the end of 2022, there are challenges in the building and housing industry, but there is also reason for optimism. There are promising signs that this storm will be weathered without suffering through another collapse like 2008.
This article is for informational purposes only. Market data is presented as of the development of the article and is subject to change.
