What can we say about the Spring Market of 2022?
A lot! We witnessed rates growing from 3.07% in November to an early June high of 5.09%. This forced buyers to make big changes to their requirements but it did not deter them from the biggest decision: buying rather than renting. With rents increasing by x% after two years of Covid, renters decided it was time to buy. A Bank of America report shows more than 70% of buyers are trimming their expectations by changing to a different neighborhood or going into smaller homes. Over half were considering taking a second job to earn extra money to buy a home.
The National Association of Realtors noted that the combination of higher mortgage rates and higher home prices means a monthly mortgage payment for the same home would jump from a monthly payment of $1,686 on a $400,000 loan ($480,000 sales price) last year to a monthly payment of $2,606 on a $480,000 loan ($600,000 price) this year. Nevertheless, buyers were willing try and make it work through a combination of cutting back on travel and restaurant spending and taking on a second job. The two years of Covid gave Millenials a lesson in forced savings and a new understanding of how to fit more housing into their budgets. The average payment from new mortgage applications in March accounted for 42% of an average American’s income, compared to 34% a year before.
What has our team’s experience been this spring? Record-breaking in many ways. We were able to help 39 buyers and 46 sellers with one of the most important financial transactions in their lives. For buyers, we were able to navigate bidding wars and advise how best to protect themselves when removing all contingencies was the only way to win. We found our buyers’ off-market properties and advised them on how to lock in the best rate. For sellers, we worked with them to prepare their homes for the market and help them choose the contract that best fit their needs.
As the spring market winds down, the volume of buyers has thinned and the number of homes coming to the market has increased. Bidding wars still happen but with fewer offers and less intensity unless it is a unique home in a super hot location. Sellers are still getting good prices and buyers are still willing to pay.
The summer market is likely to be like it has been for most of my 30 years in real estate, save 2020. People will be traveling, there will be weddings and graduations, reunions, and long-planned trips. By mid-July inventory will quiet as most sellers prefer to wait until after Labor Day and buyers are heading to all of the above. A solid fall market with steady prices is in the offing. More importantly for buyers, while prices won’t drop much if at all, more inventory and mortgage options like ARMs and interest-only loans will keep opportunities to purchase open to them. As always, if you have real estate questions we are always happy to answer them. Send me an email at sue@compass.com or give me a call at (703) 362-3221.
