Lack of home affordability and rising seller hesitancy are likely to stall the housing market in 2022.
Home Affordability Drops to 13-Year Low
In the latest reported data from Realtor.com, home affordability dropped to a 13-year low in September 2021. Per this data, the median US household would need +32% more income than presently available in order to cover mortgage payments.
This is the lowest home affordability level since November of 2008.
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Home Prices Likely to Flatten in 2022
Coupled with this 13-year low in home affordability, Realtor.com indicated in its just released Housing Report that the home prices are likely to flatten in 2022.
Flattening home prices offer home sellers little incentive to sell.
In some markets, home prices may even turn “negative.” Possible “negative” markets during 2022, according to Realtor.com, could include:
- Chicago
- Dallas
- Las Vegas
- San Francisco
- Miami
- Detroit
Even Less Inventory?
With such flattening or even “negative” home pricing possible (and even likely in 2022) due to such devastating levels of home affordability, sellers could well be de-incentivized to list their homes for sale. Such seller hesitancy “could” result in nationwide housing inventories hitting record lows in 2022.
Home Sales Likely to Slow
This combination of a 13-year low in home affordability, rising seller hesitancy and likely more limited housing supplies, Realtor.com is predicting that home sales are likely to drop -1.8%.
A drop of -1.8% in home sales would come in the midst of two very positive economic indicators for homebuyers: continuing low mortgage interest rates and consumers’ savings rates being up +10%, a level of savings not seen for a decade.
Thanks to Realtor.com and CNBC.
