Redfin Update February 2022:
January Was the Most Competitive Month on Record for Homebuyers.
Homebuyers Face the Fastest, Priciest Market on Record
Newly Listed Homes in Short Supply are Down 12% in January
42% of the homes sold for over list price in January.
the mortgage rate on 30-year fixed loans shot up to 3.55%, which was the highest it has been since March 2020. This marked the first time that rates exceeded 3.5% since the start of the coronavirus pandemic in March 2020.
According to Redfin’s experts, the 30-year fixed mortgage rate is expected to reach 4.3% by 2022 as the Federal Reserve continues to raise interest rates in an effort to slow the rate of inflation.
Rising mortgage rates are exacerbating the existing shortage of homes for sale, which is causing more people to compete for the same properties.
So, Basically Millions of homeowners have fixed-rate mortgages that are below 4%.
Newly Listed Homes in Short Supply, Down 12% in January
The number of homes for sale in January fell to a record low, but demand remained strong. Sales rose 7.5%.
Glenn Kelman, the CEO of Redfin, said that the inventory crunch may ease in the summer, but it could still last for another five years. Despite the uptick in interest rates, sales are still constrained by the lack of inventory.
Due to the lack of inventory, many houses are being offered multiple offers, which makes it difficult to compete against an overwhelming number of offers.
Homebuyers Face the Fastest, Priciest Market on Record
A record 57% of homes sold in two weeks and the typical monthly mortgage payment soared to a new high, approaching $2,000.
During the four-week period ending February 13.48% of homes sold quickly, which is a new high. The median sales price jumped 16% year over year to reach a new high of $1,997 per month.
The shortage of homes for sale is weighing on the housing market, which has led to a spike in the cost of home buying. New listings have fallen 8% year over year, which is the biggest issue facing the market.
The lack of inventory is draining the water from the market faster than the new listings. Rising mortgage rates are expected to slow the drain down a bit as buyers start to trim their monthly payments.
Real Estate Investors are Buying a Record Share of Home in the US.
Real estate investors bought a record 18.4% of the homes that were sold in the U.S. during the fourth quarter of 2021, up from 12.6% a year earlier and a revised rate of 17.4% in the third quarter.
This was a record-high number of homes in the US in the fourth quarter. The demand for these properties is strong even as home prices continued to climb.
Mid-priced homes became more popular with investors, accounting for 32% of their purchases. The majority of investors’ purchases were low-priced homes.
Think about that. 33% of the home purchased in the last quarter of 2021 were purchased by investors.
Now, despite the rise in mid-priced homes the lower-priced properties remained the most popular.
The leading cities with investor purchases were Atlanta, Charlotte, and Jacksonville.
But it’s not just investors or individuals buying homes for their personal residents.
Vacation-Home Boom Continues Into 2022, With Demand Up Nearly 90% From Pre-Pandemic Levels
In January, demand for second homes reached its highest level in a year. While primary residences also saw an increase, the demand was still strong.
In January, the demand for second homes was up by 87% from the previous year’s level.
The demand for second homes is outpacing that of primary residences. This report shows the difference in demand between the two.
The demand for second homes started in 2020 as wealthy individuals took advantage of low mortgage rates and traveled to sunny destinations.
After reaching a year-high in January, the demand for second homes eased up and although the demand for second homes is still high, it’s likely to start declining in the coming year due to higher interest rates.
So what does all this mean for you?
In actuality a 4% interest rate is fantastic! If you don’t think so ask your parents or grandparents what mortgage rate they had on their first mortgage. Even their second or third mortgage.
I believe we have passed the crazy-low interest rates. It did what it needed to do, boosted the economy and now we have blown past the boost as you can now see the rates increasing in an attempt to slow inflation.
I don’t think we will see homes come down for some time. We will continue to witness 9-10-15% home appreciation for the next 12 months.
So, What do you think will happen to the housing market. I’d love to hear your thoughts.
Until next time…thank you for watching!
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