After almost two years of double-digit increases, many experts thought home price appreciation would decelerate or happen at a slower pace in the last quarter of 2021. However, the latest Home Price Insights Report from CoreLogic indicates while prices may have plateaued, appreciation has definitely not slowed. The following graph shows year-over-year appreciation throughout 2021. December data has not yet been released.
As the graph shows, appreciation has remained steady at around 18% over the last five months.
In addition, the latest S&P Case-Shiller Price Index and the FHFA Price Index show a slight deceleration from the same time last year – it’s just not at the level that was expected. However, they also both indicate there’s continued strong price growth throughout the country. FHFA reports all nine regions of the country still experienced double-digit appreciation. The Case-Shiller 20-City Index reveals all 20 metros had double-digit appreciation.
Why Haven’t We Seen the Deeper Deceleration Many Expected?
Experts had projected the supply of housing inventory would increase in the last half of 2021 and buyer demand would decrease, as it historically does later in the year. Since all pricing is subject to supply and demand, it seemed that appreciation would wane under those conditions.
Buyer demand, however, did not slow as much as expected, and the number of listings available for sale dropped instead of improved. The graph below uses data from realtor.com to show the number of available listings for sale each month, including the decline in listings at the end of the year.
Here are three reasons why the number of active listings didn’t increase as expected:
1. There hasn’t been a surge of foreclosures as the forbearance program comes to an end.
3. Many believed more sellers would put their houses on the market once the concerns about the pandemic began to ease. However, those concerns have not yet disappeared. A recent article published by com explains:
“Before the omicron variant of COVID-19 appeared on the scene, the 2021 housing market was rebounding healthily from previous waves of the pandemic and turned downright bullish as the end of the year approached. . . . And then the new omicron strain hit in November, followed by a December dip in new listings. Was this sudden drop due to omicron, or just the typical holiday season lull?”
No one knows for sure, but it does seem possible.
Bottom Line
Home price appreciation might slow (or decelerate) in 2022. However, based on supply and demand, you shouldn’t expect the deceleration to be swift or deep.
Top 10 Markets in the US: Did Albuquerque Made the List?
(Transcript Snippet): “Tego: Right. So it was just locking that in. So yeah. KRQE had a couple real estate stories this week. One of ’em was this one about rental prices and, and going up you know, almost 20% in the last year verse. And, and they also did a story on, in top 10 markets in the us, which I thought was interesting, Tracy, because KRQE obviously’s the was from
Tracy:
Zillow though. They were quoting Zillow, Right?
Tego:
No, no, no. My, my, my point is they did this story about top 10 markets in the us for 2022. And Albuquerque’s not in the list, but I mean, it’s great. I’m glad to see the local news outlets doing stories on real estate, obviously, cuz that’s what I love. But top 10 markets, let’s just go through this in 20, 22 based on Zillow’s estimation. So
Tracy:
One and two are both in Florida, Tampa and Jacksonville. We have good friends that are realtors in both of those markets. Yeah. And a it’s fun to talk with them. We don’t see ’em in person anymore. Like we used to twice a year. But we still are in the same circles and hearing about Tampa is exciting. You know, it’s an hour in to the, the Gulf coast from Orlando, right. Our hour and a half, I suppose to get there. So, oh Florida for sure. You know, the whole east coast migration thing. Yeah. From New Jersey and New York, they say the number one, a different story will tell you the number one place people are moving from is that Metro area of New York, New Jersey. Sure.
Tego:
Well, and yeah, if you go through the list, it’s interesting because it’s really, it speaks Sunbelt, right? So Tampa, Jacksonville, Raleigh Carolina, San Antonio, Texas, Charlotte, North Carolina, Nashville, Tennessee, Atlanta, Phoenix, Orlando, Austin, all Sunbelt cities. Right? For the
Tracy:
Most part, I don’t see Fargo in there or
Tego:
No, Nope, but no Minneapolis or Detroit. Well, what’s interesting though, of course is Boise. Idaho is, is, you know, been the, the, the market around the country. That’s just gone bonkers. And of course that is not a Sunbelt country, although it’s like here in the sense that it’s it’s high desert,
Tracy:
It is. But one of the things that I, when I read the full story was that they were also looking at about affordability as well. Right. Wait, wait,
Tego:
Wait, wait, you not the headline. You didn’t just read the headline yet. She read the story. I
Tracy:
Actually looked at, I, you know, we’re Zillow, premier agents. I happen to see this come through on my email before this, but you know yeah. When I looked at it, I thought, well, so there’s some affordability things in here as to why these will also be hot and Boise, Idaho is very hot, but you know, it’s the, so Silicon valley people that can afford it now because it has changed so much with COVID.
Tego:
So, yeah. And, and you know, if, if we talk about Albuquerque and affordability, we’re still in a good position there. And I look at that all the time. Albuquerque’s still, you know, one of the more affordable markets for, for housing, you know, compared to our counterparts.
Tracy:
Yeah. So I’m curious with our listeners, you know, if, if you were to pick anywhere to move out of our area, out of the state, let’s say, you know, where would you go love to hear that? You know, you could tweet back to Tigo or something out the best way for someone to tell us, where would you go? Give us a tweet.
Tego:
Yeah. That works. That works. You can find me on Twitter, Tego, Ventura, pretty easy to find. And by the way, you’re listening to Albuquerque real estate talk with Tego and Tracy Ventura, Ventura Realty, group of Keller Williams Realty, and people can reach us at
Tracy:
448-8888 that (505) 448-8888, or welcomehomeabq.com.
If your goal is to purchase a home this year, you might be looking for any advantage you can get in today’s sellers’ market. While competition is still fierce for homebuyers, there are ways you can win and secure the home of your dreams, even in a hot market.
Act Early and Save
The earlier you act this year, the more affordable your purchase will be. That’s because experts project mortgage rates will rise as we move deeper into 2022. According to Freddie Mac, the average 30-year fixed-rate mortgage is expected to be 3.5% by year’s end. Experts forecast home prices will rise as well.
That means the longer you wait, the more it will cost you to buy a home. Instead, act early and purchase your home before rates and prices rise further. Not to mention, the sooner you buy, the sooner you can experience the benefits of continued home price appreciation yourself. Once you have your home, you’ll be able to watch its value rise, giving you confidence that your investment is a sound one.
Buy Now, Move Later
Keep in mind, with high buyer demand like we’re seeing today, you’ll be competing against other potential homebuyers, which means you need to find a way to stand out. One way to accomplish this is to negotiate with sellers and present terms that meet their ideal needs. Danielle Hale, Chief Economist for realtor.com, explains one lever flexible buyers can pull to entice sellers:
“For buyers with more flexible timelines – such as those making a move from a big city – offering a couple extra months on the closing date could sweeten the deal for sellers who also need to buy their next home.”
In other words, if you’re eager to purchase a home now before it becomes more costly and you don’t have to move right away, you could extend the date of your closing and provide the seller with the time they need to find their next home. That’s a deal that could benefit both parties and help you stand out from the crowd.
Of course, it’s important to work with a real estate professional for expert advice on how to make your best offer. Your trusted advisor knows what’s working in your market and what may appeal to sellers.
Bottom Line
Experts project home prices and rates will increase in 2022. That means buyers who are ready should act soon and find ways to strengthen their offer to meet sellers’ needs. Let’s connect today to learn how you can win in today’s market.
2021 in Review: A Banner Year for Albuquerque’s Real Estate Market
(Transcript Snippet): “Tego:
Needless to say, 2021 was a banner year for real estate in Albuquerque and New Mexico and the entire country
Tracy:
A banner year. For sure.
Tego:
And, you know, kind of the, the, the good, the bad, maybe the excellent few different, you know, things. If we look at it that way, I don’t think there was any ugly. The only ugly that I saw in, in real estate, at least in the real estate media that I follow are the, the, the crash people, you know, the housing crash, people that are just trying to get clicks on YouTube and trying to get everybody to believe the, that everything’s gonna fall apart. And that that’s the only ugly. If you say the good to bad and the ugly,
Tracy:
I think I would say there’s some ugly too, but it’s not just 20, 21, but you know, the affordability, the, the first time home buyers and ability to get an offer accepted when there’s maybe a down payment assistance program, a, a loan that’s a little bit harder for a buyer to get accepted.
Tego:
I was gonna call that one the bad. Oh. And, and to head there’s the bad. No. And, and I agree with you that I think that is probably the, the unhealthiest piece of the real estate market right now based on a, the, there’s a lot of different numbers that come at us and, and just depending on how we look at it, but if we look at annualized appreciation in the Albuquerque area, I’m seeing numbers anywhere from 10% to 18% over the last 12 months, right. That is not sustainable. We all know that the, the, the good news, well, and this is really part of the good part is, you know, people don’t buy, they, they basically pay what they can afford in, in the debt, right. They, they look at, okay, what, what’s the monthly payment? They don’t necessarily look at the top line price.
Tego:
I mean, we all do, but it’s about, you know, how much debt can they afford, right. And, and the fact that we had, you know, 3% interest rates for the most of 20, 21, we’ll get the interest rates in a moment here, people that have bought in or refinance in 2021, that’s the good, right. It’s very good. They’ve locked in their cost of housing for, let’s say the next 30 years, right. If it’s a 30 year fixed rate mortgage, and that cost is not gonna go up, that’s locked in. I mean, obviously the, the cost to maintain your home and all that stuff, obviously those things will go up with taxes, can change. Taxes will go, homeowners, insurance can change. Yeah. Yeah. All that stuff goes up, but you you’ve locked in your biggest expense for the next 30 years versus you know, the well, and, and I just wanna put, put it, I know you wanna say something, but just to understand, I mean, pay rates are going up, right. The it’s going up slowly, but, but actual wages are increasing, so wages are gonna continue to increase, but yet you’re locked in on your housing costs for the next 30 years. That’s my
Tracy:
Point. Right? Think about all the other things besides housing that have gone up in the past year that are gonna continue to go up. But for people who own a home right now, they, they own it at what they bought it at. Right. Right. They may wanna refinance at some point, if they haven’t, right. If you haven’t gone from a six or seven or 5% rate, or even a four and a half percent rate in refinanced, you should still be thinking about that lock in that lower rate. But it’s, it’s crazy to think of your housing cost is now pretty fixed except for taxes and insurance for up to 30 years. Whereas, I mean, lots of other things have gone up, you know, the minimum wage in Albuquerque in New Mexico went up on the 1st of January. Yep. Significantly, significantly, significantly. Yep. You know, it’s it locking in the rate is good. So the story I wanted to tell about this sort of, so we talk about our kids every once in a while. So our son who’s been living in Arizona for since 18, basically he’s 24 gonna be 25. Yeah. Since they’re in college. Yeah. Since he went there for college, but he’s been working for three plus years now. And he bought a house last year, actually
Tego:
End of 2020. It was in 2020.
Tracy:
Yeah. He was out during the worst of COVID when we didn’t really understand it and know it looking at houses and his realtor in Arizona as our brother-in-law. And it was not fun to go look at houses, but now he’s going, oh my gosh, I am so thankful that I bought a house that I have a low interest rate at the time. It seemed he didn’t get the best rate. He was like 3.3, five or something. Yeah. That was pretty funny. Yeah. Cuz it dropped right after down to under two, under three. But now he’s sitting on, in high in appreciation, a a really nice home with appreciation. And one of the things that we’ve told buyers for years Tigo and, and it sounds self-serving is buy as much house as you can afford. Don’t don’t under buy because the, your wages continue to go up over time in the next 30 years.
Tracy:
You’re not still gonna be making what you’re making today. Typically you, you would hope. Yeah. I mean, most people it’s worked out well. Absolutely. Yeah. When I see people who say, well, I can afford to buy a $500,000 house, but I only wanna buy a two 50. It, I feel like, you know, they’re kind of missing out because they’re probably gonna wanna buy another house down the road that better meets their needs and, and buying the house and getting the low rate and locking it in right now, being in the neighborhood you want and getting the house you want, that’s gonna serve you for a long time was a very good thing for our son. Yeah. We, we thought he was crazy, right. Because we looked at the price,
Tego:
He was buy, which, which is interesting cuz you know what you’re saying right now is a belief you’ve had for a long time. And I, I think part of it was just, you know, parents being nervous and, and, and we see that at, with, with parents helping out their, their kids behind the first house and stuff like that, you know, you wanna be, you know, we don’t want our kids to overextend themselves. Right. We want ’em to, you know, make good financial decisions. And we know that, you know, from our own experience in our early twenties, we didn’t always make good, you know, financial decisions
Tracy:
You might not have, but I did. Okay. So don’t lump me in there. Okay. Okay. But you know, we’re looking at our son, who’s now been a homeowner for a year and a half or just over mm-hmm <affirmative> and you know, he’s got 20% appreciation from the market in the home that they own right now.
Tego:
So the, the thing that’s interesting is, you know, we, we could say, okay, well, if he bought that home and a, at a different time that he wouldn to have that type of gain, obviously it’s been an extraordinary gain over the last, you know, year and a half, two years. And the, the, the, the part of it is though, it’s still understanding it’s, you’re just locking in your housing cost. And that, that brings me to the, one of the stories that really jumped out at me this week in, in the real estate world is rental prices of 18.7% in Albuquerque over the last year. So that is, I mean, that is real cost to, to live in a, basically for your housing, for people that are renting. And we talk about, okay, well, homes in Albuquerque have gone up anywhere from 10 to 50% 20, whatever it is, you know, rent have, have basically outpaced it. Well, the, the difference is people that are in their house, their, their cost did not go up, but people that are renting there’s a chance that, that their rent can go up every single year. Right.
If you’re following along with the news today, you’re probably hearing a lot about record-breaking home prices, rising consumer costs, supply chain constraints, and more. And if you’re thinking about purchasing a home this year, all of these inflationary concerns are likely making you wonder if you should wait to buy. Investopediaexplains that during a period of high inflation, prices rise across the board. And while home prices aren’t immune from this increase, here’s why inflation shouldn’t stop you from buying a home in 2022.
Homeownership Offers Stability and Security
Home prices have been increasing for quite some time, and experts say they’re going to continue to climb throughout 2022. So, as a buyer, how can you protect yourself from rising costs for things like food, shelter, entertainment, and other goods and services? The answer lies in housing.
Buying a home allows you to lock in your monthly mortgage payment for the foreseeable future. That means as other prices rise, your monthly payment will be consistent thanks to your fixed-rate mortgage. This gives you the peace of mind that the bulk of your housing costs is shielded from inflation.
James Royal, Senior Wealth Management Reporter at Bankrate,says:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
If you rent, you don’t have that same benefit and you won’t be protected from rising housing costs. As an added incentive to buy, consider that today’s mortgage interest rates are lower than they have been in decades. While inflation decreases what your dollars can buy, low mortgage rates help counteract it by boosting your purchasing power so you can get more home for your money. They also help keep your monthly payments down. This is especially important during an inflationary period because you’ll want to protect yourself from the impact of inflation as much as possible.
“If you have cash and are expecting inflation, you want to think through where you can put your money so it does not lose value. Housing is commonly looked at as a good inflation hedge, especially with interest rates so low.”
Bottom Line
The best hedge against inflation is a fixed housing cost. That’s why you shouldn’t let it stop you from buying a home this year. Not sure where to start? Let’s connect so you have expert advice and help throughout every step of the homebuying process.
