The United States saw an explosion in the real estate sector throughout the pandemic, with people selling houses due to job loss and many making use of the record low mortgage rates to get ideal loans. As mortgage rates increased in 2022, though, this caused a bit of a slow down to the unimpeded charge of upward prices.
Rising Home Prices Across the US
Oftentimes, the first quarter is a time where home prices increase only marginally, with some markets even seeing a price decrease for houses sold at this time. However, across the US, many markets performed much better than expected, with some seeing percentage growth in the double digits. Others saw more moderate gains, keeping pace with the inflation of other goods and showing that homeownership is still a good way to secure funds and store money long-term as an investment.
The Northeast’s Numbers for Q1
The Northeast saw some of the lowest numbers in the US from 2020 to 2021. The increase between 2021 and 2022 was better than in previous years. There was a rise in house prices of 13% between 2020 and 2021, with the median cost of houses sold rising from $301,900 to $341,700.
However, a more significant rise occurred in 2022, with a 15-16% rise in median home sold prices to $391,400. However, considering how urban dense the Northeast is, with large cities like New York, Boston, Philadelphia, and others, it is likely that the high demand in those areas is lowered by the rural areas surrounding those cities.
The West’s Numbers for Q1
The West saw fairly even growth from 2020 until the present. Likely this number might be dragged down a bit by some more rural areas outside the large cities that have plateaued when it comes to the median home selling price. That being said, the increases were nothing to snub your nose at. There was a 11% increase in 2021 from $405,200 to $451,500, with a slightly higher increase of 13% from $451,500 to $510,800.
The Midwest’s Numbers for Q1
The Midwest saw much slower growth and much lower house prices compared to all other areas of the US. These median prices, however, are significantly brought down by extensive rural areas with very cheap housing. The large, urban cities in the Midwest likely saw a higher percentage of growth than what is listed here. The Midwest saw a 9% growth from its median sale price of $214,500 to $235,500 in 2021.
That price rose at a faster pace in 2022, with a 12% growth from the previous median sales price to a median sales price of $263,300. It is likely that, in the more rural areas of the Midwest, some slowdown of the real estate market is happening. Therefore, any bump in housing prices may return to normal faster than in other areas of the US.
The South’s Numbers for Q1
The South has been home to some of the fiercest competition for houses, with large urban areas having hundreds of viewers for a home show up within the first few hours of a showing. That being the case, looking at the region as a whole can show us the true state of real estate in this area of the US.
The South saw a 9% increase in the median sale price of houses from 2020 to 2021, keeping in line with many other areas of the country. However, the real shower is the increase from $265,100 in 2021 to $308,100 in 2022—which is an increase of almost 17 percent! This is likely raised by a few of the hotbed housing markets, but this also indicates that many people are investing in Southern markets or choosing to live there.
The Mortgage Rates
The Fed increased the Fed funds rate halfway through the first quarter of 2022, which, in turn, affected mortgage rates. However, in most cases, this seemed to do little to deter buyers from purchasing houses. If anything, it most likely had the effect of causing many to rush to buy homes now. After all, despite the ~1% rise during the first quarter, the mortgage rates still hovered somewhere between 4-5%, which is still at a near all-time low. Many people haven’t seen these rates in their lifetimes, so they are trying to lock in good prices sooner rather than later.
The Overall Future of the Market
In short, many markets indicate continued, if a bit slower, growth. The rush and demand for houses in many markets hasn’t disappeared, so many will continue to try and find ways to nab a house while the mortgage rates are low. Some markets, such as those in the South, might see their growth plateau throughout the year to a more steady pace, as some prices might drift out of range for many buyers. That said, this will simply bring some life into some markets that have seen less growth, driving for a more consistent whole.
It is important to remember that, despite the slowing of growth in 2022’s first quarter, only 5.7 million new homes have entered the market since 2009. This is a paltry number compared to the 20 million homes entering the market each year between 1950 and 2009. When it comes to sellers, they will be able to have ideal conditions in this market that caters to all their needs. For buyers, they will need to find ways to be competitive and compete in a tight market. One of the ways to do so is for buyers and sellers to discuss the market conditions prior to moving forward with a move.
Buyers need to have a clear understanding of how to prepare and then what a winning offer looks like in this market. Sellers need to ask their agent about their options, especially if they need the funds from the sale of their current home. Contingencies are rarely accepted so what are the other options for a seller who wants to buy. There are some bridge loan-type products as well as rent backs and other options. Again, call your agent to discuss the details of this market and how to make it work in your favor.
All existing home sales numbers were taken from the National Association of Realtors®’ Existing Home Sales report.
Thank you for the lovely complete information that will be helpful to so many! Hope you are doing well!!
Thanks for your comment, Tom!
Good info. Easy to understand and pass on to Buyers. Thank you.