December 28

Homebuyers Bid Frantically as 2021 Draws to a Close

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Homebuyers Bid Frantically as 2021 Draws to a Close

By: Charles Sells

House for sale sign with the words " Sold, with multiple offers" on it

At the end of October 2021, home sales were on pace to hit a 15-year high, according to the National Association of Realtors (NAR). In fact, even though interest rates are rising along with financing costs and, of course, home-price tags, would-be buyers are bidding and winning as quickly as possible, believing it is better to act sooner rather than later in today’s uncertain housing market.

“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” said NAR chief economist Lawrence Yun. He noted that total home sales in 2021 had already exceeded 6 million before the end of October of this year, and noted that home sales rose by triple digits year-over-year in October in the Midwest, West, and South. In the Northeast, home sales rose by 99.5 percent “only.”

Yun and many other analysts think that the skyrocketing trajectory of home prices could be topping out as the year comes to an end, however. Freddie Mac recently released information indicating that both the 30-year fixed-rate mortgage and the 15-year fixed-rate mortgage are up over this time last year, although rates are still historically low. 12 months ago, the 30-year FRM averaged 2.72 percent compared to 3.10 percent today. The 15-year FRM is up 0.11 percentage points to 2.39 from 2.28 a year ago.

“Despite the noise around the economy, inflation, and monetary policy, mortgage rate volatility has been low,” Sam Khater, Freddie Mac’s chief economist, observed of the recently released numbers. “For most of 2021, mortgage rates have stayed within half a percentage point, which is a smaller range than in past years,” he added.

If rising home prices slow, however, bidding is likely to slow down as well. Investors acquiring fix-and-flip properties should bear in mind that 2022 might look very different than 2021 even if interest rates remain historically low because would-be buyers’ ability to pay could be dramatically affected by just a small interest rate increase. This is likely much of the reason that buyers are still fighting for properties in most areas of the country, but, at this point, the end could be in sight. Invest wisely and make sure that you have multiple strategies for an asset in case health policy or the national or regional economy changes things for you in 2022.


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home sales, Hot market


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