The State of Real Estate Right Now – Housing Market and Stock Market Forecasts
Forecast for US Real Estate
Welcome to the longest running real estate forecast post online. This epic post was originally published in 2015 and has enjoyed more than 700,000 views so far.
Through hundreds of revisions, this housing market forecast report still offers a common sense overview of the US real estate market through 2021 to 5 years ahead and beyond. It’s continually updated to provide the most relevant insight possible into the current housing market.
In this version, we review what really happened in 2021 and what will mean for 2022 and 2023 in particular. 2023 and 2024 will be turbulent years with interest rates rising and stimulus funds perhaps getting shut down to a degree.
Let’s give a brief review of the 2021 housing market. It is still a hot market for sales and home prices yet sales are now moderating as fall season approaches as they normally do. It’s a normal cyclical trend, but what isn’t normal is the paucity of active home listings.
The Average house prices according to NAR rose 17.3% from 12 months ago to $359,900 in July. That makes 113 straight months of year-over-year gains. Existing-home sales rose 2% on a seasonally adjusted annual rate from June to July.
Single-family home sales grew to 5.28 million in July, up 2.7% from 5.14 million in June yet down 0.8% from one year ago. The median existing single-family home price was $367,000 in July, up 18.6% from July 2020. Existing condominium and co-op sales fell to 710,000 units in July, down from 730,000 in June, yet this up 22.4% from one year ago. The condo and higher density market is recovering from the pandemic.
Will We be Past the Pandemic by Next Spring?
You can see the Realtor.com chart below that some major cities are regaining strength as workplaces reopen the economy slowly progresses. With mortgage rates at almost record lows, it’s a great time to buy, except there simply aren’t many homes to buy. In some districts, new listings are growing, but new construction is falling. Most mortgage financing now are from investors and homeowners, but is well down for first time home buyers.
If the Democrats should lose the 2022 and 2024 elections, housing market participants likely won’t be impacted. The Republicans would reopen the oil and gas energy sector which would make Colorado, Alaska, Texas, Montana and Louisiana boom again and lower energy prices which would lower inflation. And if they lower the taxes back down again, it would provide a rush of investment money back into the US.
So although we do speak of housing market downturns and stock market crashes, the economy has lots of potential and the long bull market may not be over by a long short.
The Long Running Bull Market in Real Estate
Although the political players have changed since 2015, interest rates have dropped and the pandemic struck, the housing construction and sales segment remains a key driver of the US economy. Finance, sales, construction, materials, furniture, appliances, and more expenditures add up to big money.
And commercial real estate might recover in 2022 as well. With a return to the workplace and offices in big cities, retailers will see their revenues flow and investors see some profit finally.
Amid continuing worries of a bubble and crash, the predictions and outlook for the US housing market for the next 5 years are actually positive. If stimulus funds flow, the housing market should benefit greatly, although watch out for home prices in 2022. Expert predictions may be underestimating the return of demand for real estate as a home and an investment, growing wealth, and perhaps an end of land regulation if Republicans return to power in November of 2022.
Real Estate May be the Very Best Investment Choice
Businesses are enjoying excellent earnings growth and stimulus from Biden’s infrastructure bill ensures that neither the housing market or stock market will begin to falter. Of course, there is much more to an economy than a government pouring money into it. Unforeseen circumstances might be the catalyst to bring severe corrections. But investors will be asking what is safer: stocks, Bitcoin, Gold, or good old fashioned real property.
Understanding the housing sector, what drives it, and what threatens and suppresses it are important insights. To grow the housing market, improve affordability, end homelessness, and ensure Millennials have a home to raise their young families, we need to understand who our opponents are in the housing arena. Pushing the gas pedal won’t work if someone else is applying a heavy foot on the brakes, and locking our steering wheel.
Stimulus Will Ensure Some Housing is Built, but Will it Raise Prices Too?
On the other hand, continued stimulus can’t help but power up an economy growing at a good clip and push jobs growth upward as well. The ceasing of pandemic unemployment benefits might create a ripple, but by spring of 2022, the market should be set for 5 years more of positive growth.
Zillow expects home prices to rise another 12.1% by end of July 2022.
Some experts believe this market has peaked, but $5 Trillion stimulus plus resurgent immigration has to accelerate it.
Home prices should begin rising again this spring of 2022 from New York and Boston, to Seattle, Los Angeles and even into Chicago, and down into Denver, Dallas and Houston. NAR reports home prices moderating in the last few months, and sales falling precipitously.
Are you buying blindly on the word of authority, without your own plan and strategy? Buyers should be as knowledgeable of market trends, stats, threats, and the key factors that will ensure the housing market and stock markets thrive in 2022 and the next 5 years.
The State of the Housing Market 2021
Harvard University’s yearly study on the state of the market. Let’s take a look at their findings as context for this years market and where this takes us in terms of demand, sales and prices next year.
The graphic below shows how home prices have risen predictably vs a backdrop of reduced housing availability. In fact, Harvard also calculated that real home prices are now at their highest levels ever.
And prices continuously rise, despite the current moderation, and home price to income ratio is up in dangerous territory similar to the record 2000’s before the stock market and house market crashes.
Sales of new homes have enjoyed a renaissance, however sales of existing homes via the mls has plummeted. New construction has suffered of late, however with the pandemic out of the way in spring in 2021, we’ll see a much better production of new homes.
Given current economic trajectories, summer 2022 should be a brisk period for sales, even if prices keep rising. It’ll be a return of home buyers and consumers feeling more confident and wages should be higher too.
New Home Sales 2021
Unfortunately, most of the new construction has been in the single detached segment and not so much where it’s really needed in multifamily developments. Some of the blame for that is a lack of land available for multi-housing development near major cities.
Most of the construction and sales have occurred outside major metros in smaller cities.
Harvard reports sales jumped 53% in July, to 972,000 units at a seasonally adjusted annual rate. For 2020 as a whole, sales of new single-family homes were up 20.4 percent, to 822,000 units—the highest mark since 2006.
Inventory has actually fallen more to this point in September, so that makes buying prospects fairly bleak this fall.
You can see more on the latest stats for August on the housing market forecast post.
As a whole then, homes are as unaffordable and unavailable as they’ve ever been. It’s a huge problem that isn’t being addressed by state and Federal governments. However, Texas, Colorado, Florida and Idaho appear to be responding with growing housing offerings and a growing population.
Some locations have benefitted from the remote work trend, but in 2022, many big corporations will be pulling their employees back to the urban regions, particularly New York City and the Bay Area. That should moderate demand within what are now called the pandemic destination cities.
In terms of demographics, Harvard found that after living with parents in 2020, young adults have headed back out on their own. This will continue to happen and many of them will be looking to buy a home. Given rising interest rates that might happen by 2023, high down payment requirements, lack of affordable starter homes, and high prices, most will experience frustration with the home buying dream.
Since natural population growth and immigration slowed strongly in 2020, this has helped to keep home prices from exploding. Now the Covid pandemic passing, the rise in households will put the price pressure back on.
Before we get cynical about homeownership, Harvard found that the rate of owning a home in the US continues to rise.
Should You Sell Your House in 2022?
You might want to put your home up for sale any time between now and next August. 2023 is fraught with uncertainty.
See the forecasts and predictions for markets in Boston, Los Angeles, San Francisco and the Bay Area, New York, Miami, Houston, Seattle, and San Diego etc.
Hottest Markets in the US Right Now:
Take note of the Dallas Fort Worth, Houston, Austin, Atlanta, Miami, Phoenix, Seattle, Tampa, Orlando, Denver, San Antonio, Las Vegas, and Nashville market data below courtesy of Realtor.com. This Sept 11th hotness index includes changes in listing prices and active listing growth. Boise City, Raleigh, Charlotte, Sarasota and others had astonishing losses of active listings. Austin and Tampa have seen the largest price changes in the last year.
|Rank||Metro Region||Median Listing Price Change||Active Listing Growth YoY||Days on Market Change||New Listing Growth|
|1||new york-newark-jersey city, ny-nj-pa||-0.90%||-13.40%||-1||1.90%|
|2||los angeles-long beach-anaheim, ca||-2.00%||-20.90%||-1||-9.10%|
|4||dallas-fort worth-arlington, tx||10.00%||-34.00%||-10||-0.80%|
|7||houston-the woodlands-sugar land, tx||8.20%||-20.00%||-12||-0.20%|
|8||miami-fort lauderdale-west palm beach, fl||13.40%||-46.70%||-32||-15.90%|
|9||atlanta-sandy springs-roswell, ga||12.60%||-29.70%||-8||-14.20%|
|11||san francisco-oakland-hayward, ca||-4.90%||-17.90%||-5||31.80%|
|15||minneapolis-st. paul-bloomington, mn-wi||-1.00%||-8.60%||-1||2.40%|
|16||riverside-san bernardino-ontario, ca||16.70%||-2.00%||-6||2.00%|
|17||tampa-st. petersburg-clearwater, fl||22.70%||-38.90%||-14||-5.40%|
|18||san diego-carlsbad, ca||5.10%||0.10%||5||-8.80%|
|19||st. louis, mo-il||0.00%||-13.90%||-12||-3.70%|
|28||san antonio-new braunfels, tx||12.30%||-25.90%||-12||12.20%|
|30||kansas city, mo-ks||-4.40%||-2.20%||-7||10.80%|
|33||las vegas-henderson-paradise, nv||24.60%||-32.40%||-11||-8.60%|
|34||austin-round rock, tx||33.20%||-10.50%||-15||48.90%|
|36||san jose-sunnyvale-santa clara, ca||4.30%||-20.80%||-4||22.40%|
|37||virginia beach-norfolk-newport news, va-nc||-4.50%||-18.30%||-10||-14.40%|
|38||milwaukee-waukesha-west allis, wi||-15.40%||7.40%||-6||31.30%|
Here’s 8 Reasons Why People Are Still Eager to Buy Real Estate:
Do the Underlying Economic Fundamentals Support Higher Home Prices?
Some think housing shortages will keep home prices high. However the economy is looking good and unemployment is headed much lower. This is a time when you can take changes to improve your life however, it’s wise to consider specifically where the real opportunities are. That might even include Real Estate Investing and investing in Rental Income Property.
Check out the report on investments in rental property if you’re planning to buy in markets such as Los Angeles, San Francisco, San Jose, Silicon Valley, New York, Miami, Oakland, Phoenix, Seattle, Denver etc. Buyers are still dreaming in California a good look at the San Diego Real estate market, and the Los Angeles real estate market as economic indicators, and a fresh look at mortgage rates. To be on the safe side, see this post on the likelihood of a US housing market crash in the years ahead. Looking to put your house up for sale in 2022? Find a Realtor now or discover how to sell home now at market value.
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Many Americans will soon be on their own without Fed assistance and facing back rent and overdue mortgages. Cities such as Denver, Dallas, Houston, San Antonio, Austin, Salt Lake City, Las Vegas, Tulsa, Seattle, Boston, New York, New Jersey, Chicago , San Antonio, Austin, Colorado Springs, Salt Lake City, an Los Angeles may see some new home listings out of this distressed homeowner market, but not as much as some forecasters are predicting.
This content was originally published here.