As inflation soars and loan applications plummet, real estate analysts are starting to see evidence of a buyers’ market in 2022. For the past several years, many real estate analysts considered the housing market to be a ‘seller’s market’. In the real estate world, home prices rose, interest rates fell, and demand reached one of the highest points in decades.
Now, though, that trend may be changing. As the United States housing market shows a slowdown in purchasing, the tide shifts towards buyers instead.
The Post-COVID Surge in Buying is Ending
During the first year of COVID-19, the real estate market infamously stalled. However, a mere year later, lockdowns began to let up. As that occurred across the country, the real estate market kicked into overdrive, seemingly making up for lost time.
This fueled a homebuying and refinancing frenzy, turning the housing market very much in favor of existing homeowners. As a direct result, home prices soared and houses sold in minutes. More shockingly, the already limited housing inventory fell to record-low levels.
Now, new reports signal the end of the homebuying surge. Americans slowed down on home purchases, and the housing market began cooling off. Listings are now sitting for weeks without a showing. In conclusion, the market in general shifted greatly toward favoring buyers over sellers, leading to the buyers’ market in 2022.
One of the key indicators of this changing trend is that data shows that existing and new home sales declined in the last few months while more homes are on the market. Additionally, pending home sales have fallen for the sixth straight month in April and have slowed down to their lowest pace in ten years.
Causes of the Shifting Buyers’ Market in 2022
Though the shift to a buyers’ market in 2022 can’t be attributed to one major cause, these are a few of the key reasons that experts noted:
- Supply is Catching Up to Demand: Supply of homes rose 9% from this time last year. This major talking point in the previous few years as the surge of buyers looked for homes that didn’t exist. Now, the number of homes for sale is catching up to demand once again.
- Interest Rates are Rising: As interest rates increased, housing demand declined slightly from the past couple years. While at record lows during the pandemic, interest rates became a major talking point. Thus, prospective home buyers looked to obtain mortgages to buy new homes.
Looking Toward the Buyers’ Market in 2022
As inflation continues its insurmountable climb, prices skyrocketed across industries. In addition, mortgage rates recently exceeded 6%, a far faster pace than anticipated. As affordability comes into question, the previously white-hot housing scene looks to shift toward a buyers’ market in 2022.
For questions on the Chicagoland real estate market, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.