For many home buyers across the U.S., the hardest part about buying a home in 2022 might be finding one.
Housing market inventory has hovered near record-low levels for many months now. And a recent report showed that it’s not getting any better. Buyer beware.
Why It Could Be Hard to Buy a Home in 2022
On January 20, 2022, the research team from Zillow published a housing market report that showed just how tight the inventory situation has become. According to that report, the inventory of for-sale homes in the U.S. declined by a whopping 40.5% from December 2019 to December 2021.
That’s a huge reduction in supply, and it could present big challenges for those planning to buy a home in 2022. This year, many buyers will find it hard to find a property that checks all of their boxes and also falls within budget. Compromise will be the name of the game.
According to the January 20 Zillow report:
“There were fewer options for would-be home buyers on the market at the end of 2021 than any time in recent memory, according to Zillow’s December 2021 Market Report. And the limited supply seems to have reignited home price appreciation, as monthly home price growth accelerated in December for the first time since July.”
It’s a Nationwide Problem
Inventory conditions can vary from one city or region to the next. But the recent declines appear to be affecting most parts of the country. As a result, many home buyers could be affected by it in 2022.
According to Zillow, for-sale housing market inventory dropped from November to December in 49 of the nation’s 50 largest metro areas. (Probably in all 50 of them, but data for Nashville wasn’t available.)
When measured annually, the biggest inventory declines occurred in:
- Miami, Florida (-48.0%)
- Denver, Colorado (-40.3%)
- Raleigh, North Carolina (-39.2%)
In these and other highly competitive real estate markets, buyers will have to work hard when buying a home in 2022. They’ll have to make strong offers and possibly even waive their contract contingencies. That’s the reality of buying a house in a hot market with record-low inventory.
The number of homes for sale nationwide plummeted at the end of 2021. According to the Zillow report: “After slipping modestly in November, inventory outright plunged in December, dropping a further 11.1% to a new record low of about 923,000 homes nationwide.”
At the end of 2021, home buyers across the U.S. had 19.5% fewer properties to choose from compared to the end of 2020. When compared to December of 2019, there are now 40.5% fewer homes available for sale.
Is There Any Good News for Home Buyers?
But it’s not all bad news for home buyers. Yes, buying a house in 2022 could be hard for some buyers, due to an inventory shortage that just won’t let up. Even so, there might be a ray of light on the horizon.
The overall pace of the real estate market has slowed over the past few months. This means buyers might not feel as rushed to make an offer, when buying a home in 2022. (Unless things ramp back up again.)
According to the Zillow report cited above, the typical number of days it takes to sell a home has increased steadily since last summer. In June 2021, for example, the typical U.S. home spent just one week on the market before going under contract. Last month, that metric had risen to 13 days.
In other words, the real estate market has slowed a bit. It’s now taking homeowners longer to sell a home (on average) than it did during previous months.
Seasonal trends play a role here to some degree. Homes usually take longer to sell during the fall and winter months, and for various reasons. But there have been other signs that market could be cooling a bit, in addition to those cited above.
Just don’t expect a “buyer’s market” anytime soon. That’s probably well beyond the horizon.
It’s important to note that real estate conditions can vary greatly from one local housing market to the next. Some of the hottest markets, including several in Florida, could continue to sizzle during 2022. But in other parts of the country, the pace of home sales could decline over the coming months, giving buyers a bit of a breather.
Bringing Your ‘A’ Game to the Housing Market
So what does all of this mean to home buyers across the U.S.? In short, they should probably expect more of the same.
The inventory woes of 2021 have followed us into the new year, and that doesn’t seem likely to change anytime soon. As a result, buying a home in 2022 could be just as challenging as it was last year. Rising prices could add to the challenge.
Buyers who are planning to make a purchase this year would do well to review the playbook of those who succeeded in 2021. In a tight market, buyers have to bring their ‘A’ game and hit the ground running.
Over the past 12 months or so, we saw an increase in the number of purchase offers above the asking price. Whether that’s a wise strategy or not is the subject of a different article. But it’s a reality of the current real estate scene. Buyers should also consider expanding their search box, to increase their chances of finding a suitable home within budget.
It also helps to be flexible and open-minded. In a housing market with record-low inventory, you probably won’t get everything you want in a house. You have to take what you can get, or else wait until the market becomes more buyer-friendly.