4 Key Market Factors We’re Watching

Here are the four market factors we’re keeping an eye on this year.

Today we’re starting a new video series on projections for 2022. Here in part one, I’m sharing the key market factors we’re keeping an eye on this year.

One of the key indicators is the increasing interest rates. They’ve already been rising; year to date, they’ve grown 0.25%. We’ll keep a close eye on rates because they impact affordability and the real estate market as a whole. The Federal Reserve has announced that they plan to tick up interest rates another three times this year, which will have a substantial impact on debt-to-income ratios. 

We’re also keeping an eye on the low inventory rates. In 2020, the number of homes available for sale was down 36% year over year, and last year we were down 50% compared to 2020. Inventory levels are currently our main issue, and it’s contributing to many other things, such as appreciation.

"The Federal Reserve has announced that they plan to tick up interest rates another three times this year."

Last year, home values appreciated more than 20%. Most economists are saying we’re not in a bubble and that appreciation will continue. Though interest rates are slowly trending upward, demand is still exceedingly high because of the lack of inventory. So while we’re predicting appreciation to slow this year, we still expect to see between 5% and 9%, and some are even thinking we may have double-digit appreciation again in 2022. 

The last indicator we’re watching is inflation and supply chain problems. Our money is becoming more and more burdened by inflation rates, and supply chain issues still plague new construction. That directly translates to heightened prices for the cost to build.

As always, we’re here to serve you. If you have any real estate-related plans for this year or questions you’d like to ask, please reach out via phone or email. We’d be honored to help you.