By Andrew Bash
We are finally starting to see the light at the end of the long and winding tunnel of the pandemic. And in our office, the question on everyone’s mind is “What does this mean for the real estate market?”
Today I want share with you what experts are predicting from the market in the upcoming months and further into 2022.
The beginning of the pandemic brought the housing market to a standstill for several months, but it rallied quickly. Coupled with low mortgage rates and the desire to spend more time at home, we saw a marked increase in housing demand across the country.
In fact, the National Association of Realtors reports that more existing homes were sold in 2020 than in any year since 2006. This boom continues and shows no signs of letting up anytime soon. Realtor.com reports that the midwest and northeast housing markets were thriving in the month of April, taking 14 of the 20 strongest market spots in the country. It was and continues to be a sellers’ market.
What’s driving the sellers’ market?
Who is driving this curve? The answer may surprise you. Boomers are settling in, and instead of selling, many are choosing to retrofit their homes so that they can stay in them longer. It is millennials who currently make up the largest share of homebuyers. In large cities across the country, we are seeing the desire to rent eclipsed by the desire to buy.
Given the present market, this has proven challenging. But there is some good news on the horizon. Trends are showing that more people are planning to list their homes for sale in the next 12 months, providing much-needed inventory to the housing market.
Another question that I am often asked is if interest rates are going to remain low for the foreseeable future. It is important to remember that forecasting interest rates can be challenging even in the most stable of markets. Current rates are higher than they were at the beginning of 2021, which saw a 50-year low according to Freddie Mac.
Since then, we have seen some rate variation, with the month of April sitting at an average rate of 3.18%. Industry experts Freddie Mac and the Mortgage Bankers Association (MBA), both predict that we will see increasing interest rates in 2022, averaging around 3.8%. This is to be expected, as mortgage rates typically increase during periods of economic improvement and we are seeing this improvement reflected as we gain the upper hand in the pandemic.
So even though you may have heard rumblings of impending doom from media outlets, experts say that a market crash in 2021 or 2022 is unlikely. In fact, the booming market continues to play a pivotal role in the improvement our country’s economy.
Bash & Co. Sotheby’s International Realty is an innovative full-service residential real estate brokerage that leverages the latest technology to serve clients in emerging, established, and luxury neighborhoods across the Kansas City area. Follow them on Instagram here and on Facebook here.