RE: Dr. Lawrence Yun, Chief Economist for the National Association of Realtors
Yesterday I had the pleasure of listening to Dr. Lawrence Yun, Chief Economist for the National Association of Realtors, give his thoughts on where the market is going this year. Here are some key takeaways:
The annual inflation rate in the United States is currently sitting at 7.1%. This is the highest in 40 years!
Real estate has proven to be a very good hedge against inflation. See included photo.
In order to curb inflation, interest rates will need to rise. Dr. Yun predicts a rate of 3.7% to end 2022. Though this isn't excessively far off from where we are today, even a small jump in rates can hinder the purchasing power of a first time buyer. This would thin the competition a bit.
The disruption to the supply chain is slowing the completion of new construction. Dr. Yun expects this to improve in 2022 so that builders will hopefully bring more inventory to the market.
Dr. Yun believes that the worst of the inventory shortage is passing and that spring time will reveal more inventory. (We can only hope! )
He notes 3 key places where inventory will come from this year: 1.) home builders will produce more with supply chain issues decreasing, 2.) the mortgage forbearance program is winding down and banks will be requiring payback or requiring the sale of these homes, and 3.) an increase in estate sales due to a higher mortality rate during Covid.
We are not expecting to see as high of appreciation numbers as we did in 2021. On a national scale, prices were up 14%, but with rates potentially rising this year, an increase of 4% is the prediction.
Even if we do see rates tick up a bit, we will likely end the year under 4% which is still a great rate to take advantage of. Don't let the lesser appreciation scare you away this year either. If you bought a home for $500,000 and it appreciated only 4%, you'd still have a gain of $20,000! All this to say that whether you plan to buy or sell this year, there will still be plenty of opportunity for both and we are here to help.
If you aren't sure if now is the right time for you to make a move, let's chat and formulate a plan that gets you where you want to be - on the road to home!
