The fourth quarter ended 2021 on a strong note, continuing the trends of the prior months, and closing the book on what was a record-breaking year in residential real estate. In spite of increasing sales prices and higher interest rates, we saw existing home sales increase October through December across the country. Also increasing, but on a somewhat slower pace, were new listings and new home builds. As the supply chain issues are rectified, these new builds will add much needed inventory to an already competitive houseing market, although it is uncertain how much these new homes can shift the trajectory of decline that we have experienced for the last couple of years.
Q4 average sales prices were up compared to last year, increasing 9.4% from $281,189 in 2020 to $307,751 in 2021. Buyer demand continues to increase, and economists feel that all indicators of buyer activity will trend upward. In addition, percentage of original list price received increased in the fourth quarter to 99.5% – up from 98.8% at this time last year.
On the topic of interest rates, the Federal Reserve announced in November of 2021 that they would be reducing their bond buying program downward to $105 billion in December, with further reductions leading to goal of zero a net additions to the Fed’s bond portfolio by mid-2022. A series of interest rates is set to follow this reduction. Source: Fed Will Start Tapering in December 2021 (investopedia.com)
According to Lawrence Yun, Chief Economist with the National Association of Realtors, interest rates are expected to reach 3.7% by the end of the year. A positive to this increase: this rise in mortgage rates could lower buyer demand and in turn, create more selection for those buyers that are still in the market to purchase.
We are available to assist with any market questions you may have, and are ready to help – whether you are ready to list your home or want buy a new home in the Kansas City area!
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.