For the past 2 years, the real estate market in Houston has been booming despite the ongoing pandemic crisis. Will this trend continue in 2022? We certainly can’t say for certain. You don’t have to look any further back than January of 2020 to know that economic predictions are a tricky thing. But after almost 15 years selling real estate in Houston, we think we are in a pretty good position to make an educated guess on what might be ahead.
History isn’t going to look fondly on many aspects of 2021, but with respect to real estate, it was a happy year for many. When 2021 home sellers look back, we think most are going to be pretty happy with the results they were able to achieve. For those homebuyers who were lucky enough to find a home in the tight inventory environment, we think they will be pretty happy with the mortgage rate and the price they were able to lock.
The numbers are pretty astounding. According to the Houston Association of Realtor’s year of end report, single-family home sales surpassed 2020’s record volume by more than 10 percent! Additionally, sales of all property types for the year totaled 131,041, up 13.3-percent from 2020’s record volume. Total dollar volume for 2021 shot up 28.2 percent to a record-breaking $40 billion.
Throughout the year, but especially last Spring, homes across almost every neighborhood and price point saw multiple offers and near double-digit price growth. There is no doubt that it was a boom year.
Will this boom continue in 2022? Will there be more options available for homebuyers? Those are a couple of the questions Houston home buyers and sellers are asking as we start the year.
At a national level, economists and housing experts are divided on whether sales will rise or fall in 2022. After 2 consecutive years of historic price and sales growth, 2022 is probably going to have a hard time hitting similar numbers. Although we think the 2022 market is going to be a healthy, more balanced market, there will probably be some slowing of price growth. Here are some trends to look for in 2022:
MORTGAGE RATES WILL RISE MODESTLY
In 2020 and 2021, home buyers were able to take advantage of extraordinarily low mortgage rates. Depending on when they locked in, rates were available as low as the upper 2 percent range on a 30-year fixed-rate mortgage. Unfortunately, those rates are probably behind us in the near to moderate term. Over the past few months, mortgage rates have crept above their 52 week high. This upward movement comes thanks to rising inflation and the Fed’s tapering of asset-purchase program. Mortgage experts are predicting a range between the upper 3% up to 4% by the end of 2022.
MORE OPTIONS FOR HOME BUYERS
Thanks to historically low-interest rates, homebuyers aggressively pursued the few available homes in the market. In many markets across Houston, we saw a lot of frantic multiple offer situations. As mortgage rates increase, homebuyers may pursue a home purchase with less enthusiasm in 2022. These changing attitudes may help to moderate demand, which could increase the number of available options for home buyers.
Additionally, single-family builder confidence remained high at the end of 2021, according to the NAHB/Wells Fargo Housing Market Index. As home builders work through the supply chain issues of the pandemic, we should see an increase in the number of new homes available for home buyers.
HOME PRICES WILL CONTINUE TO RISE
At the end of 2021, Houston’s housing inventory was still at a ridiculously low 1.4 months of supply. We’ve got a long way to go before we are near a more balanced market, which happens around 3 to 4 months of available inventory. Although inventory levels should rise, they probably won’t increase sufficiently to see falling home prices. Most neighborhoods in Houston will continue to see rising home prices.
WE’RE HERE TO GUIDE YOU
While citywide real estate numbers can provide a “big picture” outlook, real estate continues to be a local business. As local market experts, we are well placed to guide you through the issues most likely to impact sales and home values in your particular neighborhood.
If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year. Fill out the form below to get matched with an agent to learn more about the home buying and home selling process.