Home Price Appreciation Is Skyrocketing in 2021. What About 2022?
One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price appreciation. According to the latest indices, home prices are skyrocketing this year.Here are the latest percentages showing the year-over-year increase in home price appreciation:The House Price Index (HPI) from the Federal Housing Finance Agency (FHFA): 18.8%The S. National Home Price Index from S&P Case-Shiller: 18.6%The Home Price Insights Report from CoreLogic: 18%The dramatic increases are seen at every price point and in all regions of the country.Increases Are Across Every Price PointAccording to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year:Increases Are Across Every Region in the CountryEvery region in the country is experiencing at least a 14.9% increase in home price appreciation, according to the Federal Housing Finance Agency (FHFA):Increases Are Across Each of the Top 20 Metros in the CountryAccording to the U.S. National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices (see graph below):What About Price Appreciation in 2022?Prices are the result of the balance between supply and demand. The demand for single-family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there’s some good news on the supply side. Realtor.com reports:“432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.”There will, however, still be a shortage of supply compared to demand in 2022. CoreLogic reveals:“Given the widespread demand and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.”Yet, most forecasts call for home price appreciation to moderate in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts, calls for a 5.12% appreciation level next year. Here are the 2022 home appreciation forecasts from the four other major entities:The National Association of Realtors (NAR): 4.4%The Mortgage Bankers Association (MBA): 8.4%Fannie Mae: 5.1%Freddie Mac: 5.3%Price appreciation is expected to slow in 2022 when compared to the record highs of 2021. However, it is still expected to be greater than the annual average of 4.1% over the last 25 years.Bottom LineIf you owned a home over the past year, you’ve seen your household wealth grow substantially, and you’ll see another nice boost in 2022. If you’re thinking of buying, consider buying now as prices are forecast to continue increasing through at least next year.
Understand Your Options To Avoid Foreclosure
Even though experts agree there’s no chance of a large-scale foreclosure crisis, there are a number of homeowners who may be coming face-to-face with foreclosure as a possibility. And while the overall percentage of homeowners at risk is decreasing with time (see graph below), that’s little comfort to those individuals who are facing challenges today.If you haven’t taken advantage of the forbearance period, it may be time to research and understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:“Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments . . .” The good news is, there are alternatives available to help you avoid having to go through the foreclosure process, including:ReinstatementLoan modificationDeed-in-lieu of foreclosureShort saleBut before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.Understand Your Options: Sell Your House Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.In today’s real estate market, many homeowners have far more equity in their homes than they realize. Over the last year, buyer demand has been high, but housing supply has been low. That’s led to a substantial increase in home values. When prices rise, so does the amount of equity you have in your house.According to CoreLogic, on average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000 (see map below):So, what does that mean for you? Over the past year, chances are your home’s value and therefore your equity has risen dramatically. If you’ve been in your home for a while, the mortgage payments you’ve made over time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.Frank Martell, President and CEO of CoreLogic, elaborates on how equity can help:“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.”Don’t Go at It Alone – Lean on Experts for AdviceTo find out what your house is worth in today’s market, work with a local real estate professional. We’ll be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area. Since home prices are still appreciating, you may be able to sell your house to avoid foreclosure.If you find out that you have to pursue other options, your agent can help with that too. We’ll be able to connect you with other professionals in the industry, like housing counselors who can look into your unique situation and offer advice on next steps if selling isn’t the best alternative.Bottom LineIf you’re a homeowner facing hardship, let’s connect to explore your options and see if you can sell your house to avoid foreclosure.
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