| This year has seen a big jump in home prices with double-digit gains occurring in many parts of the country. The rise in prices has been fueled in part by strong demand, low rates, and scant inventories.
The NAR reports that the median price for an existing home jumped 13.1% from October 2020 to October 2021. CoreLogic recorded an 18% annual gain in October, the FHFA saw an 18.5% increase from Q3 2020 to Q3 2021 while the September S&P Case Shiller saw a 19.5% surge in year-over-year prices. They are staggering numbers considering what prices have done in the past. A news headline from August 2010 reads that home prices “jumped a substantial 3.6%” in the past year, reported S&P Case Shiller at the time.
We know what prices have done historically so, what is the outlook for prices moving forward? Zillow is forecasting a 13.6% annual gain, Fannie Mae up 8%, Freddie Mac sees a 7% rise to name a few. And why such big increases after the frothy gains in 2021? Supply and demand: The price of a good tends to increase when the supply of that good decreases. In this case, continued strong demand from homebuyers coupled with low inventories will continue to drive price gains in 2022.
Bottom line: Home price gains are at the forefront, but potential homebuyers are always on the radar. People need a place to live and with rents on the rise, a stable mortgage is always beneficial and could have long-term price appreciation.
Source: Mortgage Market Guide |
