In the United States housing sector, home buyers face strong barriers heading into 2022. While December 2021 saw major FHFA changes, housing starts and home sales remain competitive.
Home Buyers Face Strong Barriers to Entry in Housing Inventory
In 2022, home buyers face strong barriers in the real estate market. The first major barrier stems from housing inventory. Throughout the country, many regions of the country suffer from limited homes available for sale. In fact, the latest data showed that housing inventory sits at just a 2.1-month supply, well below the equilibrium of a 6.0-month supply.
Optimistically, housing starts far exceeded expectations in November 2021. As a matter of fact, housing starts soared upwards by an impressive 12% increase from October. Additionally, housing starts now sit at their highest level since March 2021, with both single-family and multi-family units demonstrating strength.
Home Buyers Face Strong Barriers to Entry in Real Estate Sales
As home buyers face strong barriers to entry, the second major barrier comes in the form of home sales. However, November 2021’s data showed that home sales were on track for their best year since 2006. Also, home sales rose from their prior month.
Despite the good news, the median existing-home price increased by 14% higher than last year at this time to $353,900. Beyond that, the real estate market presents stiff competition for home buyers. Because of the lack of inventory in tandem with suppl chain issues, home buyers are more likely to face a bidding war. In addition, real estate investors tend to dominate the market at the lower end, placing a tough burden on prospective home buyers.
Federal Housing Finance Agency Changes
While home buyers face strong barriers to entry, the Federal Housing Finance Agency (FHFA) made a major announcement last month. The FHFA announced that it planned to increase its baseline conforming loan limit for Fannie Mae and Freddie Mac mortgages in 2022. This increase sees the baseline conforming loan limit increase by 18% from $548,250 to $647,200. It also follows a 7.5% increase in 2020.
For more expensive real estate market, the new limit increases by 150% from $647,200 to $970,800. Thus, 2022 is set for the sixth year in a row of increases to the baseline conforming loan limit.
Summary
As home buyers face strong barriers to entry in the real estate market, the Federal Housing Finance Agency’s latest move should help to balance out transactions. However, home buyers continue to face limited housing inventory and stiff purchase competition in 2022.
To learn more about the 2022 real estate market, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.