{"id":23787,"date":"2024-07-02T14:29:56","date_gmt":"2024-07-02T14:29:56","guid":{"rendered":"https:\/\/www.anthonydidonato.net\/wordpress\/?p=23787"},"modified":"2024-07-02T14:29:58","modified_gmt":"2024-07-02T14:29:58","slug":"experts-housing-market-likely-to-normalize","status":"publish","type":"post","link":"https:\/\/www.anthonydidonato.net\/wordpress\/experts-housing-market-likely-to-normalize\/","title":{"rendered":"Experts: Housing Market Likely to \u2018Normalize\u2019"},"content":{"rendered":"\n

Economists predict slower price appreciation, easing inflation, and rising interest rates during NAR\u2019s virtual Real Estate Forecast Summit.<\/p>\n\n\n\n

While strong homebuyer demand and inventory shortages will continue into 2022, the housing market is unlikely to repeat this year\u2019s dizzying heights, in which existing-home sales reached their highest point in 15 years with an estimated 6 million sales. Slower growth in home prices, decelerating inflation, and multiple interest rate hikes by the Federal Reserve could contribute to a more normal housing market in the new year, National Association of REALTORS\u00ae Chief Economist Lawrence Yun said Wednesday during NAR\u2019s virtual Real Estate Forecast Summit<\/a>. Yun presented a consensus real estate forecast based on a survey of 20 leading economists.<\/p>\n\n\n\n

For 2022, the group of experts predicts that annual median home prices will increase 5.7% and inflation will rise 4%. \u201cOverall, survey participants believe we\u2019ll see the housing market and broader economy normalize next year,\u201d Yun said. In addition, Yun expects existing-home sales will decline to 5.9 million in 2022 and housing starts will increase modestly to 1.67 million as the pandemic\u2019s supply chain backlogs subside.<\/p>\n\n\n\n

Housing Affordability Remains a Concern<\/h2>\n\n\n\n

Even if the market begins to settle down, affordability issues likely will continue to dampen homebuying prospects for many would-be owners. Housing affordability had already reached crisis levels before the pandemic added to the strain, said Todd M. Richardson, general deputy assistant secretary at the Department of Housing and Urban Development\u2019s Office of Policy Development and Research.<\/p>\n\n\n\n

However, the Biden administration\u2019s Build Back Better plan<\/a> offers several programs that have the potential to increase housing access for all. The bill provides $10 billion in down payment assistance for first-generation home buyers, $24 billion for housing choice voucher rental assistance, and $15 billion for the Housing Trust Fund to build and preserve over 150,000 affordable homes for low-income households. \u201cOur programs are about unlocking possibilities,\u201d said Richardson. \u201cSupport is needed most for housing in low- to moderate-income communities.\u201d<\/p>\n\n\n\n

Manufactured housing offers a potential source of inventory that could help ease the housing crunch. Affordable entry-level homes continue to be among the units in shortest supply, and modern manufactured housing\u2014with its high-quality factory construction and lower per-unit cost\u2014could help fill in some of the gaps, said Lesli Gooch, CEO of the Manufactured Housing Institute. In addition, manufactured homes could offer wealth-building opportunities for buyers. \u201cResearch by LendingTree shows that, from 2014 to 2019, the median value of manufactured homes increased by 40%\u2014six points above site-built homes,\u201d said Gooch.<\/p>\n\n\n\n

Naa Awaa Tagoe, acting deputy director at the Division of Housing Mission and Goals at the Federal Housing Finance Agency, seconded the call for more affordable housing and shared her agency\u2019s strategies in 2022 for increasing equitable access to homeownership and rentals. Appraisal efficiency, small-balance mortgage purchases and refinances, and low-income housing tax credits are among the division\u2019s top priorities for 2022, said Tagoe.<\/p>\n\n\n\n

Regional Differences Could Affect the Housing Market<\/h2>\n\n\n\n

Housing prices are likely to moderate nationwide, but regional variation could occur in 2022. Overpriced areas with lower predicted population growth will experience a greater slowing of prices compared to those with higher predicted growth, said Ken H. Johnson, associate dean of graduate programs at Florida Atlantic University. \u201cEveryone will experience moderation, but there will be differences,\u201d he said.<\/p>\n\n\n\n

Strong building starts in the suburbs could be good news for first-time buyers. Businesses are competing for workers right now, said realtor.com\u00ae Chief Economist Danielle Hale, and that means buyers could have more flexibility in choosing where they live. In contrast to Yun, who saw \u201chidden gem real estate markets\u201d<\/a> in the South, Hale counseled would-be buyers to look further north. \u201cThe Mountain West, pockets of the Northeast, South, and Midwest are all locations where affordability creates incentives,\u201d said Hale.<\/p>\n\n\n\n

Demographics Offer Insight Into the Future<\/h2>\n\n\n\n

Jessica Lautz, NAR\u2019s vice president of behavioral insights and demographics, offered highlights from the 2021 Profile of Home Buyers and Sellers<\/a>, noting several demographic trends that will continue to affect the housing market into 2022 and beyond:<\/p>\n\n\n\n