How the Housing Shortage Has Reshaped the Way We Buy Homes
Last Updated on November 22, 2021 by Maggie Sutton
Would you ever consider making what might be the largest purchase of your life without actually having seen the asset? Probably not but that is the state of the housing market today. A shortage in housing supply, low-interest rates, and a pandemic-fueled desire for more space has created intense bidding wars, and it’s not likely to disappear anytime soon.
In fact, according to a recent New York Times article, what we are seeing playing out today in cities across America just might be the new normal of real estate. That’s because the shortage in housing supply shows no sign of improving significantly.
Widespread Housing Shortages
Freddie Mac estimated at the end of 2020 that the United States was 3.8 million housing units short of meeting the nation’s needs. Mix in a new homebuyer base attracted by low interest rates and tax policies that favor home buyers. Millennials are ending their leases, moving out, and buying houses in larger numbers. In fact, they make up the fastest-growing segment of buyers today, according to a recent National Association of Realtors report.
The shortage of supply mixed with increased demand has translated into runaway house prices that used to be the standard in larger metropolitan areas. Today, median home price in small- and medium-size metropolitan areas rose by jaw-dropping levels:
- Boise, Idaho 46%
- Phoenix, Arizona 36%
- Austin, Texas 35%
- Salt Lake City, Utah 33%
- Sacramento, California 28%
More of the Same in 2022
Housing market economists say home prices will continue to grow in 2022. On the high-end, there is Zillow, which is forecasting 13.6% price growth in the coming 12 months, and Goldman Sachs, which predicts a 16% bump by the end of 2022. Fannie Mae is less bullish, saying prices will climb 7.9% between Q4 2021 and Q4 of 2022. Meanwhile, CoreLogic is forecasting just a 1.9% price jump over the coming 12 months.
Meanwhile, the forecast calls for an increase in mortgage interest rates. Fannie Mae foresees the average 30-year interest rate climbing to 3.4% by the end of next year. Meanwhile, the Mortgage Bankers Association is forecasting that the mortgage rate will climb to 4% by the end of 2022, and to 4.4% by the end of 2023.
This scenario has created an absolute nightmare for would-be home buyers. Furthermore, it has especially taken a toll on working heroes — think teachers, health care workers, firefighters and police officers — looking to transition from renting to homeownership. Programs aimed at helping this segment of home buyers are all the more important to help these heroes gain a foothold on the ever-challenging housing ladder.
Homes for Heroes Can Help the Financial Crunch
While we can’t put more housing on the market, Homes for Heroes can at least reward you when you buy one. Any teacher, healthcare worker, law enforcement, EMS, firefighter, or active or retired military member can receive Hero Rewards when they buy, sell, buy and sell, or refinance a home with a Homes for Heroes specialist. Sign up now to be automatically connected with a specialist in your area.
Our specialists are experts in their geographic market and are here to serve you, our community’s heroes. On average, heroes save $2,400 when they use a Homes for Heroes real estate and loan specialist. Sign up today to speak with a specialist and start 2022 on the path to homeownership.
