What Does the Rest of the Year Hold for the Housing Market?

The Number of Homes Available for Sale Is Likely To Grow

There are early signs housing inventory is starting to grow and experts say that should continue in the months ahead. According to Danielle Hale, Chief Economist at realtor.com, “The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch-up is likely to continue, . . . This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.”

• As a buyer, having more options is welcome news. Just remember, the housing supply is still low, so be ready to act fast and put in your best offer upfront.

• As a seller, your house may soon face more competition when other sellers list their homes. But the good news is if you’re also buying your next home, having more options to choose from should make that move-up process easier.

Mortgage Rates Will Likely Continue To Respond to Inflationary Pressures

Experts also agree inflation should continue to drive up mortgage rates, albeit more moderately. Odeta Kushi, Deputy Chief Economist at First American, says, “… ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”  

• As a buyer, work with trusted real estate professionals, including your lender, so you can learn how rising mortgage rate environments impact your purchasing power. It may make sense to buy now before it costs more to do so, if you’re ready.

• As a seller, rising mortgage rates are motivating some homeowners to make a move up sooner rather than later. If you’re planning to buy your next home, talk to a trusted real estate advisor to decide how to time your move.

Home Prices Are Projected To Continue To Climb

Home prices are forecast to keep appreciating because there are still fewer homes for sale than there are buyers in the market. That said, experts agree the pace of that appreciation should moderate – but home prices won’t fall. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains, “Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022. . . Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.” 

• As a buyer, continued home price appreciation means it’ll cost you more to buy the longer you wait. But it also gives you peace of mind that, once you do buy a home, it will likely grow in value. That makes it historically a good investment and a strong hedge against inflation.

• As a seller, price appreciation is great news for the value of your home. Again, lean on a professional to strike the right balance of the best conditions possible for both selling your house and buying your next one.

Bottom Line

Whether you’re a home buyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Let’s connect to discuss your goals and what lies ahead, so you can pick your best time to make a move.

Is the Housing Market Correcting?

The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.

This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says, “The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below) :

The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.

And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.

Existing Home Sales Then and Now

Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):

Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more the typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than in 2019 as well.

It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this, “. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”

Bottom Line

If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about our local market and what it means for you when you buy or sell this year.

Top Sales for June 2022 in Coastal Boca Raton

The top sale during the month of June was a contemporary new construction estate on an interior lot in Royal Palm Yacht & Country Club that traded for over $2,000 per square foot - a record for the neighborhood. June also saw one of the first resale transactions at Alina: Residence 812 traded at $3,200,000 - up over $500,000 from when it was first sold in May 2021. Only two condos made the top ten list last month - both at Alina. The remaining homes on the list were sprinkled throughout the region across Blue Inlet, Mizner Lake Estates, Lake Rogers, and Boca Harbor. Half of the homes on our list were sold in the first 30 days, while many took over 120 days to make it to closing.

1371 Royal Palm Way
5  beds |  7 baths | 7,819 sq. ft.
$16,470,000

1801 Spanish River Road
4 beds | 6 baths | 5,600 sq. ft.
$11,995,000

1739 Royal Palm Way
5 beds | 6.5 baths | 8,811 sq. ft.
$11,550,000

501 Kay Terrace
5 beds | 5.5 baths | 4,813 sq. ft.
$6,050,000

799 NE Marine Drive
5 beds | 8 baths | 7,254 sq. ft.
$5,950,000

367 Mizner Lake Estates Drive
4 beds | 4.5 baths | 6,556 sq. ft.
$5,550,000

200 SE Mizner Boulevard Ph-18
3 beds | 4.5 baths | 3,490 sq. ft.
$5,325,000

3798 NE 7th Drive
4 beds | 4.5 baths | 4,710 sq. ft.
$5,250,000

799 NE 70th Street
5 beds | 5.5 baths | 5,600 sq. ft.
$3,649,000

200 SE Mizner Boulevard
3 beds | 3.5 baths | 2,745 sq. ft.
$3,200,000

7700 NE Spanish Trail Court
5 beds | 3.5 baths | 2,932 sq. ft.
$3,100,000

260 NE Wavecrest Court
5 beds | 6 baths | 4,261 sq. ft.
$3,025,000

2800 S Ocean Boulevard 18a
3 beds | 2.5 baths | 2,145 sq. ft.
$2,525,000

4201 N Ocean Boulevard 1204
3 beds | 4 baths | 3,125 sq. ft.
$2,320,000