California Association of Realtors (C.A.R) released its 2022 predictions earlier this month. The influences of the pandemic will still resound in the housing market in 2022. As rates are on the rise — from the previously unprecedented lows– the housing market will move into a purchase driven market. That said, due to the low supply and increasing home prices, we will see a decline in existing single-family homes sales by 5.2%. According to C.A.R., “An imbalance in demand and supply will continue to put upward pressure on prices, but higher interest rates and partial normalization of the mix of sales will likely curb median price growth.” This is positive towards stabilizing home prices in the future.
As we have seen a shift back towards city centers in 2021, the pandemic has also changed the course of where people are living. According to U.S. News, “While more urban housing markets have seen a comeback in 2021 that helps city-lovers feel reassured more dense living isn’t dead, suburban areas remain a hot spot, and in many cases they are some of the most competitive places to buy a home.” The pandemic has created a boom in remote work that is largely poised to continue. The labor market is turning to an employee market where many workers are demanding the ability to work remotely. This is a contributing factor to many workers moving to more affordable living areas such as the suburbs. They can keep their existing jobs while moving somewhere more affordable. These are important factors to keep in mind when searching for your next real estate investment opportunity and what markets will continue to be hot.
Even though we will continue to be in a seller’s market, homebuyers recently pushed out of the market due to rapidly increasing home prices, will see some relief in 2022. As remote work continues, and buyers also continue to move to more affordable areas, the statewide median home prices will then be prevented from rising too quickly throughout the next year. Selling your real estate investment property won’t prove to be the challenge, but investors will need to focus their strategies on finding the right properties to purchase. The 30-year fixed mortgage rate is not predicted to spike in any major way and is still low by historic standards. In fact, the MBA has forecasted that the 30-year fixed will not likely even reach 4% by the end of 2022. Assuming COVID does not throw us any curveballs this year and people continue to live as they currently are, the economy is poised to be stable with California unemployment rates continuing to lower.
Limited supply is expected to continue into 2022, however the foreclosure moratorium is set to end and the level of impact of that is somewhat unknown. What we do know is that the Mortgage Forbearance Program at one point protected as many as 7.2 Million homeowners. As the economy has improved and so has the job market, that number has drastically dropped to 1.5 Million as of September 28th. The data suggests that many of these homeowners have equity in their homes and will be able to list their homes for sale. This varies from the perception that many of these homes will go under foreclosure and rather could hit the market quickly potentially dramatically adding to the supply. If only a portion of these 1.5 Million homeowners hit the market, it could still make a material impact as currently NAR only accounts for 1.3 Million homes for sale. It will be interesting to see how things shake out in 2022.
Having a relationship with a private lender like Pivotal Capital Group, will provide investors with not only the capital they need to secure properties quickly, but also backed by leadership that endured many different types of housing markets. This expertise of PCG can help you navigate through 2022.