2021 was one of the best ever for sellers

Last year was one of the best of all-time for over-the-mountain home sellers and at the same time, one of the most challenging years for buyers! The new year will likely be more of the same. The million-dollar question as Mike and Hayden see it- will buyer's income levels keep pace with forecasted mortgage rate increases? If so, home prices will likely continue to rise. If not, the housing market will probably start to cool a little, in line with decreasing affordability.

Rates expected to rise in 2022

Mike Wald believes that, "It's a safe bet that the Fed will work hard to engineer a soft landing in their efforts to lower inflation. If Powell is going to be successful at reducing the rate of inflation without causing a recession, he'll need to be careful not to let rates rise to rapidly." If mortgage rates rise at a modest pace, the impact on the housing market could actually be positive. Leading economists in the mortgage and real estate industries are predicting mortgage rates will increase to the 3.5% to 3.7% range. That's an increase of about 7%. Rates at those levels are still historically very attractive. The threat of still higher rates could encourage buyers to get off the fence, and buy a home to lock in a great mortgage rate. 

Income levels expected to increase 

Top analysts see incomes rising in the 3% to 3.5% range. While that pace is slower than what's expected for mortgage rate increases, it should help to support current home prices. Another factor that will help to buoy home prices in the future: Americans hold an estimated $2.5 trillion in excess savings. 

Over-the-mountain empty nesters will decide to "take the money"

As more and more empty nesters discover how much move up buyers are willing to pay them for their homes, more of them are deciding to sell. There's a significant amount of residential single-family inventory in over-the-mountain communities being withheld from the market because empty nesters are struggling to figure out where to live during the next phase of their lives. They know their home is no longer a good fit after their kids have grown up and moved out. But, they're comfortable with their current home and it's close proximity to the people and places that occupy their daily routines. Now, that home prices have reached levels where homes like theirs are selling for multiples of what they originally paid, empty nesters are becoming more and more tempted by the idea of moving. This should help to make buying an over-the-mountain home in 2022 a little less stressful.

Over-the-mountain communities are landlocked

Homewood, Mountain Brook, Vestavia and parts of Hoover are surrounded by other communities, so they can't grow geographically. That makes it difficult to add new housing units to the supply. This factor, along with higher quality schools, will continue to help keep inventories in over-the-mountain communities tighter and prices higher than in surrounding areas. 

Slight uptick in distressed sales in 2022

Nationally, housing economists expect an uptick in distressed home sales as the moratorium on foreclosures ends. This trend isn't likely to have much impact on the over-the-mountain housing market.

More first-time homebuyers are expected to enter the market

Based on recent surveys, 60% of first-time homebuyers are considering buying in 2022. Even though the percentage homes in over-the-mountain communities that are considered to be "first-time" homes  is low, the fact that first-time buyers are bullish on home buying could still have a significant impact on the  over-the-mountain real estate market. As first-time homebuyers purchase homes in areas surrounding over-the-mountain communities, they'll be making it possible for the sellers of those homes who are "moving up" to compete for over-the-mountain listings.

Another great year!

Housing prices increased at an historic pace in 2021. By comparison, 2022 isn't likely to be quite as impressive. But, all indications are that it should be another great year for selling your over-the-mountain home. And it might be a little easier to buy one, too.

Posted by Mike Wald on


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