Real Estate Market Update December 2021 | Erik Braceland

Real Estate Market Update December 2021 | Erik Braceland

Mortgage rates, home prices and sales oh my.  Let's take a look at what's trending with these subjects and a few others

Welcome to another REAL ESTATE MARKET UPDATE. I’m Erik Braceland with Braceland Homes here in sunny San Diego, California, where we guarantee the sale and/or purchase of your home.  Here on the Braceland Homes channel we cover topics related to buying and selling residential real estate, and trends happening across the housing market.

Here are some projections on mortgage rates from four of the leading providers of information on mortgage rates; Fannie, Freddie, Mortgage Bankers Association and National Association of Realtors.  What are they saying? Sometime between the middle and the end of next year, they're forecasting between three and a half and four percent, on the average 30-year fixed home loan. So, as I've been saying, it’s going to cost more to buy a home, and I think you should expect mortgage rates to rise. Now I’m not here today with a crystal ball to say this is what mortgage interest rates are going to be, but I am here to say I think we can expect an environment of rising mortgage rates.

A lot of people are concerned and asking "what’s going to happen to home prices in 2022?"  Well, forecasters are predicting an average 5.1 percent rise in home price appreciation next year. You can see anywhere from seven and a half to almost 3 percent home price appreciation on the low side. This is a direct nod to seeing more inventory coming to the housing market.  The price will always be dictated by supply and demand in any market. And, as such, holds true for the housing market as well.  That's what we can expect relative to home prices in 2022.  Basically, a continuation of our current housing market environment going into next year.  Other questions that may be on your mind at times, "is the housing market going to crash?" And many of us concerned about all we’ve seen over the last few years, or the last 20 years for that matter. "What about mortgage forbearance?  How will those mortgage forbearance plans factor in to all this?"  The short answer is, don't worry, the housing market is not going to crash regardless of what all those clickbait thumbnails on the internet claim.  But let's take a look at projected home sales.

The bottom line here, is that home sales for 2021 are forecasted to continue increasing throughout the year. 2022 home sales are predicted to be even stronger. I want to remind you that last year in 2020, over six and a half million homes sold in this country. We’re forecasted to sell more than that this year, and even more than that next year! The past two years, have both been phenomenal years in the real estate market, with an even better year predicted in home sales for 2022 as well. 

This graphic really does a great job to show just where we’re at in the housing market based on months of housing inventory in this extreme seller’s market that we’re in right now. Let's quickly talk about buyer's market vs seller's market.  I've talked about this before, but a simple way to understand this is that six months of housing inventory is kind of the sweet spot where we have a neutral market.  Above six months of housing inventory creates a buyer's market.  Below six months of housing inventory creates a seller's market like we're in right now.  Some markets, like our san Diego housing market, never really climb out of the seller's market because homes are in such high demand.  Something about the weather.  The beaches. I don't know.  Anyway, thinking about selling your home?  There has literally never been a better time! Sometimes I feel like a broken record saying that, but it's just the truth.  This visual just underscores that.  I know my big fat head is in the way, but it shows all the way back to 1999, where it was also a seller's market.  But then housing inventory hovered around five percent.  Now it is consistently under three percent, and it’s just been a great seller’s market for those that have decided to sell, and that continues today.

Now I want to touch quickly on home equity and home appreciation.  For you home owners out there, this is all about the ever-increasing value of your home, but bear with me for just a moment while I address our home buyers.  What advice do I have for you home buyers that say, "I really don't want to buy at the top of the housing market"?  Well, I certainly do understand why you might feel like we're at the top of the market because homes are so expensive. That is not an uncommon feeling, and the best time to buy a home, is right now.  But I do want to qualify that statement with this one, now is the best time to buy a home if it is also the right time for you and your family to make a move.  I'll always go back to that.  Forget about what the market is doing, and first consider the needs of you and your family.  That should always come first.  The next best time to buy a home is...as soon as possible, if it can't be right now because things homes are just getting more expensive. Price increases and mortgage rates are conspiring against you.  This visual representation of a recent home price expectation survey, based on the national average priced single-family home, Shows the projected home appreciation for that home, if it was purchased this year, all the way through 2026.  Let's look at this.  What kind of appreciation is at stake here? A hundred and eleven thousand dollars! Just over $111,000 in real home appreciation over the next five years on a $350,00 home! Wow!  Where else are you going to get a return like that?  And that's just the gain on home appreciation and increased home equity!  Did I mention you'll be living in that home, and paying down the fixed payment on your mortgage loan, instead of paying an ever-increasing rent payment towards your landlords mortgage loan, all while your home equity magically appreciates all by itself?   

While we don't have time to go into all the other benefits of homeownership right now, I did just shoot a recent video on some of the non-financial benefits of homeownership that I'll link to in the description.  So, check that out, but it really is a good time to go out and buy a home. 

I want to conclude this week's update with a little inspiration.  All of us lead busy lives to some extent or another, and this time of year can be even busier for many of us, just always going, going, going.  Take some time over the next few weeks to rest with your family and friends as this year comes to a close. Don’t get lazy and take all of that time, but take the time you need to rest and relax. Sir James Tyson said this, “The moment you feel most tired is the moment you must accelerate, because that’s when everybody else is feeling tired as well...but if you can break through that pain barrier you can achieve great things." This time of year, is a great time to do that because you can accomplish it without too much pain or sacrifice.  Here's how; take some time off if you can, but set aside some of that time off towards the end to get a jump on next year.  I think you'll find it helpful to  begin the year with a head start and a little extra momentum.  If you begin 2022 strong, you will carry that momentum throughout the year. 

That's it for now.  I'm Erik Braceland for this edition of our Real Estate Market Update. And from everyone here at Braceland Homes, thanks for joining me, and thank you for the time that you spend to be aware of what's happening in our current housing market.  You will enjoy a better, more successful real estate experience because of it!

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Thanks you!