The world has experienced a rather turbulent first third of this year, filled with day-to-day surprises. It appears that humans have evolved to absorb these challenges more easily than ever. Volume-wise the markets remain strong, but expecting a repeat of 2021 seems unlikely as interest rates rise rather notably. We believe lower inventory and higher prices should compensate for market volatility. All markets are driven by supply and demand. The cost to build today compared to three years ago has contributed to a lack of affordable home options that will likely keep supply and demand out of balance for years to come.
Some items to consider as 2022 carries on:
- As rents rise, the returns become more appealing to investor buyers adding more competition to the buyer pool.
- Rising interest rates will price out some buyers.
- Institutional investors and i-buyers, with cash, continue to compete with end user buyers
- More and more Millennial and Gen-z-ers are leaving the home and entering/expanding the housing market, while many boomers are acquiring 2-3 homes.
- Between tariffs on building supplies and supply chain issues, building costs will continue to go up.
Luxury Market 43 contracts were signed last week at $4 million and above in Manhattan, four more than the previous week. This was the largest weekly total of the year. Condo accounted for 33 of the deals, while 4 coops and 6 townhomes were in the mix as well. Despite the large number of contracts, not one deal was at $10 million and above, the first time that has happened since 2020.
Mortgage Rates The average rate for a 30-year fixed-rate home loan rose to 5.27% from 5.1% a week earlier, the highest reading in nearly 13 years. The average rate on America’s most popular home loan was 3.22% in early January and 2.96% a year ago. From January to April, rates rose at their fastest 3-month pace since 1994. More borrowers are paying fees to cut their interest rates and making higher down payments to lower the amount they have to finance… and many who may have sought a 30-year fixed rate mortgage are now opting to lock into adjustable rates for shorter periods. The average homeowner owns their home for about 16 years.....about half of the 30-year traditional mortgage
Eviction Filings Rise Weeks after New York’s eviction moratorium expired, legal services were overwhelmed by an influx of cases. In the months since, the situation has only grown more burdensome.
Landlords have filed about 2,000 eviction cases on a weekly basis since the beginning of March, the New York Times reported. The volume of filings represents about a 40% jump from mid-January, when the moratorium expired. As of early April, housing courts were contending with a backlog of 200,000 eviction cases that piled up during the two-year eviction ban. By comparison, about 262,000 eviction suits were filed in all of 2019, according to data from the state court system.
Energy Prices Energy prices will soar 50.5% this year—after nearly doubling in 2021. The rise in energy prices has been “the most significant since the early 1970s.” US Oil output more than doubled between 2010 and 2020: Production rose over 62% between 2010 and 2015. Between 2015 and 2020, it grew another 36%. Oil prices rose over 55% between December 2020 and today due to the Russia-Ukraine War.