National Experts Say Housing Likely to Normalize in 2022.
From Realtor Magazine:
While strong homebuyer demand and inventory shortages will continue into 2022, the housing market is unlikely to repeat this year’s dizzying heights, in which existing-home sales reached their highest point in 15 years with an estimated 6 million sales. Slower growth in home prices, decelerating inflation, and multiple interest rate hikes by the Federal Reserve could contribute to a more normal housing market in the new year, National Association of REALTORS® Chief Economist Lawrence Yun said Wednesday during NAR’s virtual Real Estate Forecast Summit. Yun presented a consensus real estate forecast based on a survey of 20 leading economists. Read full article here.
What about Colorado?
From DMAR Real Estate Market Trends Report:
From October to November, the market saw a staggering 33.41 percent decrease in month-end active inventory, dropping to 2,248. Throughout the entire Denver Metro area, there are currently only 1,444 single-family detached properties and 804 attached properties to buy.
Over the past five years, month-end active inventory dropped between 23.36 percent in 2016 and 27.92 percent in 2019. Theoretically, if inventory stayed the course and dropped 25 percent this year, the market would end the year at 1,686 active properties leading into 2022, which is drastically lower than the end of 2020 and would lead to the most competitive year yet. With 2,248 active listings on the market and that number expected to go down by the end of the month, expectations are set that 2022 will be a wild and competitive ride.
Despite high competition on the horizon, people continue to buy and sell relentlessly. Year-to-date, there have been more houses purchased than in any of the previous five years with the median sales price for single-family and attached properties setting records at $525,000.
Marty’s Local Predictions (Disclaimer: As always, my crystal ball is in the shop.)
All local economic and real estate indices are pointing toward growth and competitive real estate market continuing to drive prices up. My prediction is that we will see the median price of single family homes up by 10% or more again in 2022, even with the Fed’s plan to bump interest rates. “But it’s a bubble about to pop, right?” Not that I can see. There are two ingredients required for a housing bubble: easy lending and over building. Neither of those are present here. It’s not a bubble; it’s simple supply and demand. Affordability will continue to be stretched and hopefully area salaries will increase to meet the rising cost of home ownership. But the ability for the average income earner to buy an average home near Denver ceased to exist in 2018 and prices have continued to rise. A few of the numbers I watch: As of December, 2021, the reports are showing Denver metro area’s unemployment this month is down to 4.5%, consumer price index is up increase 4.6% over-the-year in October (largest increase since Nov 1990), and industrial vacancy rate is down 6.4%. You can see more economic info like this here. Jobs, price index, commercial vacancy rates, and so much more are a leading indicator to the lagging reaction of housing prices. More people are moving to Colorado and telling their friends what a wonderful place we have here. I suggest we get used to the growth and the prices because I believe they are here to stay. At least for 2022 and very likely for a few more years.