Quarterly Market Report 1st Quarter 2022
May 2, 2022 | Stephanie Buss
Market Report Quarter One 2022
According to the National Association of Realtors®, pending home sales slipped in February, marking four consecutive months of transaction decreases. “Pending transactions diminished in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.'”
In our nine-county Western North Carolina region, home sales slid by 6.6%. 2,350 homes were sold in the first quarter of 2022 compared to 2,518 homes in the first quarter a year ago. Demand remains extremely high, as evidenced by the fact that many properties are receiving multiple offers as soon as they hit the market. The bottleneck to successful sales is the very limited supply of homes for sale. While inventory is traditionally at its lowest point in the first quarter of the year, the inventory of homes for sale in the region is down 28% from the same quarter of 2021.
It’s no secret that the low inventory and high demand have led to a rapid increase in home prices. According to the Federal Housing Finance Agency, home sale prices in the Asheville MSA increased 17.5% in 2021, one of the highest appreciation rates seen in our region. Interest rates have also been on the rise and are expected to remain above last year’s low levels for the balance of the year.
Ironically, rising prices and the higher borrowing costs could propel even more buyers into the market this spring. Fear of missing out is a powerful driver of sales. At the same time, some sellers looking to move or downsize may see this as their best opportunity to get top dollar for their houses, which would add much-needed inventory to the marketplace.
While it remains an extremely competitive market, much of it is driven by a new generation of home buyers. As older Millennials, those aged 32 to 41, reach the point where their career and family plans are starting to gel, they and younger Millennials (23 to 31) now make up 43% of home buyers, the largest among the generations and up from 37% just a year ago, according to the NAR. This large segment of the buying population will certainly be impacted by declining affordability created by both rising interest rates and prices. Therefore, home sellers are entering a new era and will have to carefully consider the changing market conditions when pricing property in order to continue to attract buyers.
NAR’s Yun forecasts mortgage rates to hover at 4.5% to 5% for the remainder of the year and expects a modest 7% reduction in home sales in 2022 compared to 2021.
“Home prices themselves are still on solid ground,” he added. “They may rise around 5% by year’s end, and we should see much softer gains in the second half of the year.”
The Carolinas remain one of the most desirable areas of the country in which to live. Recent increased buyer preferences toward suburban and small town communities that offer high quality of life and abundant outdoor recreation opportunities will continue to support a robust real estate market in Western North Carolina. It is a dynamic time in the real estate industry, and the guidance and counsel of a skilled real estate professional has never been more valuable. It would be our honor to assist you with your real estate needs, whether buying or selling real estate in this beautiful area we are fortunate to call home.
~ Neal Hanks, President of Beverly-Hanks, Realtors®
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