Competition Remains Hot In The U.S. Real Estate Market

The average home price in the United States soared to $390,500 in 2021, up from $266,300 in January 2020. The past year has seen a home-buying frenzy fueled by a convergence of historically-low mortgage rates, the growing trend in remote working, and new opportunities for young buyers looking to secure their first homes. These same dynamics are expected to continue into the next year with the housing market remaining competitive overall.

Rising home sales and prices

Home sales are set to rise by 6.6% in 2022 with home prices also increasing a further 2.9%. Demand from young buyers — namely the roughly 45 million Millennials (aged between 26-35) who find themselves at prime first-time homebuyer age — means a continued fast-paced and competitive market should be expected. Moreover, an expected 3.3% rise in income along with the ongoing trend in remote working is set to give buyers the freedom to widen their search parameters to the suburbs, as well as more budget-friendly metro areas. As such, these markets will remain popular and continue to offer affordability despite overall rising home prices.

Housing affordability: a key concern

Since mortgage rates are also expected to slowly rise, affordability will become a key priority for home buyers. Moreover, the supply of much-coveted single-family homes and apartments continues to be unable to keep up with demand, which ultimately increases market competitiveness and puts a dent in housing affordability. It’s therefore essential the government works to improve accessibility to good-quality, affordable housing. Fortunately, affordable home loans are also available to buyers. Conventional loans, for example, usually offer lower costs than other types of popular loans, The Home Loan Expert explains. Despite the affordability challenges resulting from soaring home prices and rising mortgage rates, the growing cost of rent (which is set to increase by 7.1%) will ultimately end up being a big motivator for the majority of first-time buyers.

Growing digital transformation

The real estate industry will also continue to embrace digital transformation at a rapid rate. In particular, electronic options will increasingly become the norm throughout the entire home buying process, including sales opportunities, listing, communicating with agents, and closing deals. Digitization particularly suits younger buyers who expect quick and easy digital solutions in all areas of life. Nevertheless, although more and more homes are being found online and the convenience of virtual home tours is increasingly replacing open houses, the professional understanding and in-person emotional connection provided by human agents during this complex transaction will continue to be vital to home buying and selling process.

Ultimately, the upcoming year will be a strong one for the real estate market as demand from homebuyers across the country remains as powerful as ever. Although sellers will continue to find themselves in an extremely strong position, ongoing competitive interest rates combined with expected price stabilization may provide buyers with welcome benefits in the months to come.


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