With inventory vanishing, iBuyers “evolving,” and interest rates rising, here are more 2022 trends to watch in the housing market.
Cash-Out Refis Are Hot
According to CoreLogic, homeowners with mortgages saw their home equity increase more than +31% in 2021. The “…collective home equity gain amounted to over +$3.2T and an average gain of $56,700 per borrower since Q3 2020.”
It’s no surprise that cash-out refinancing was happening in 2021. Black Knight indicated in its latest “Mortgage Monitor” report that tappable equity soared $254B for an all-time high of $9.4T. Cash-out refinances have been happening in Q4 2021 at its highest “quarterly volume of equity in 14 years.”
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Build-to-Rent Housing Is Rising in Unaffordable Markets
Soaring prices are continuing to price more and more Millennials (and others) out of the housing market.
Examples of markets now unaffordable are Boise ID and most all of Texas. In Boise, according to the Zillow Home Value Index, the typical home now costs $519,081, an increase of +35.6% y/y. In Texas, according to Mark Meyer, a principal and chairman of TGB, a landscape architect firm, the average home price has skyrocketed 35% y/y.
Meyer said, “In Dallas, you can’t buy a townhouse for less than $280,000…Land prices went up during COVID, and that affects the sales price of a house. We have a huge affordability issue.”
Obviously, if a person can’t afford to buy, they have to rent…if they don’t want to live in their truck/car.
There are some 43M rental properties and approximately 34.5% renters in the US. Both numbers are rising.
According to RCLCO, a real estate consulting firm, 22M of the 43M rental properties in this country are single-family rental homes. This number too is on the rise. RCLCO’s estimation is that single-family rental homes account for approximately 5.1% of all new single-family home construction.
This trend, for now, is well-funded and appears to be unstoppable. However, this trend is not without critics.
Alex Kamkar, a managing shareholder for Texas-based Bold Fox Development, is one of those critics. Kamkar said, “It (build -to-tent single-family housing) is the most anti-American thing in the last 50 years…rents being charged for these communities are so high that tenants can’t save enough for a down payment…(and)…those rents will never come down”
COVID-19 – A Trend Accelerator & Economic Change-Maker
According to the Counselors of Real Estate in its annual report “The Top Ten Issues Affecting Real Estate,” COVID-19 is both a trend accelerator and a stimulus of “forced fundamental economic structural change.”
Two years ago, no one could even imagine a world that was nearly shut down. closed offices or the Great Resignation that would then affect the well-being of business services, small businesses such as restaurants and/or entertainment/event venues. And no one could have imagined the implications of remote work and mobility.
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With the ending of 2021 and beginning of 2022, the Counselors of Real Estate indicated that just 36% of office workers were back at on-site workplaces and that only 25% of workers overall were on-site. 83% of companies are permanently shifting to hybrid work models. Such drastic changes in work have gigantic implications for all real estate sectors including residential,, commercial, medical, educational and retail spaces.
A recent survey from Goodhire indicates that 68% of employees would choose, if offered, remote work, 85% of workers believe their colleagues and others would choose remote work over on-site work and that 61% of workers would take a pay cut to work remotely.
If these percentages sustain themselves, the impact of new home sizes, locations and included amenities will be felt for a very long time.
Thanks to The Washington Post.