Home prices are upshifting again during what ought to be the slowest time of the year. Why? Rising rent prices.
People Ricocheting Between Red-Hot Housing Market & Skyrocketing Rents
People who opted out of 2021’s housing market in hopes that rising prices and inventory shortages would cool off in 2022 are in for a disappointing surprise. Home prices are surging again while inventories continue sliding downward at a time that should be the slowest time of the year. But you already know about “shoulda, woulda, couldas… they almost never turn out the way we think or would like them to.
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Why is the housing market experiencing a bright green light…again? Skyrocketing rents.
Leases signed at the end of 2020 are coming up for renewal and those renewed leases are including steep hikes in monthly rents.
2022 Spring Homebuying Season Now Fast-Tracking by Several Months
From May until September, many housing experts thought the housing market was normalizing again. Lumber prices which set an all-time high in early May fell by over 70% in early fall. Purchase mortgage applications dropped to their lowest level since spring of 2020 in July. In August, home builders’ sentiment, according to the National Association of Home Builders, plummeted to its lowest level in a year.
Then, BAM! Mortgage purchase applications jumped back up to the strongest level seen since February 2021. Home-buying sentiment jack-knifed back up to April/May levels. Lumber prices have doubled since the middle of November, homebuilder stock prices are setting all-time highs and home inventory levels are again plunging.
Why? During these same months when the for-sale market looked to be “normalizing,” rents began skyrocketing as people flocked back to cities, apartment vacancies plummeted and renters who timed their one-year leases towards the end of 2020 when rents were at their lowest are now being shocked by rent increases as much as +50%.
No wonder some renters would rather try to buy a house instead of paying that much more in rent.
Will this renewed interest in homebuying cause rent prices to go down and vacancy rates to rise? Or will this going back and forth between high home prices and high rent prices become a new housing game that buyers/renters have to play in 2022?
Thanks to Bloomberg.