B4 • Friday, February 11, 2022
thegardenisland.com
THE GARDEN ISLAND
5 BUYING OR SELLING TRENDS IN 2022 ation is good for net worth, the annual payments due to increasing principal, interest, taxes, and insurance can lead to overall housing costs becoming a larger percentage of the household budget.
Andrew Herrig WEALTH OF GEEKS NETWORK
Last year’s perfect storm of supply constraints, low-interest rates, and record-high demand led to a sharp increase in home prices. Five clear trends are emerging that will help homeowners decide if they want to engage in the real estate market this year after the median U.S. home price hit an all-time high of $404,700 in the third quarter of 2021. It was an increase of almost 20% from the same period in 2020 per the U.S. Department of Housing and Urban Development. If you’re looking for some relief in the crowded and competitive housing market in 2022, there may be hope in sight. “With more housing inventory to hit the market, the intense multiple offers will start to ease,” according to Lawrence Yun, the National Association of Realtor’s chief economist. “Home prices will continue to rise but at a slower pace.” Whether you’re contemplating buying your first home, or are a real estate veteran, here are five real estate trends you need to watch in 2022. Mortgage rates will continue rising After hitting an all-time low of 2.65% in January of 2021, mortgage rates have been on the rise. At the end of 2021, the average 30-year fixed-rate mortgage stood at 3.05%, based on data from
New home construction will increase In 2021, building supply and labor shortages contributed to home-builders’ inability to keep up with demand for new construction. Mike Fratantoni, the chief economist at the Mortgage Bankers Association, sees the supply shortage starting to ease in 2022, leading to additional inventory hitting the market. WILFREDO LEE / ASSOCIATED PRESS “Home-builders will have more success overcoming A sold sign is shown in front of a home, Monday, Sept. 20, 2021, in Surfside, Fla. current building material Freddie Mac. shortages and should be would increase by 5.7%, far sulted partly from a lack of Most economists expect able to increase the pace of less than the previous year. inventory, work-from-home rates to continue increasing trends, and supply chain “Overall, survey participants construction to meet the sizmodestly in 2022. Redfin’s constraints limiting new con- believe we’ll see the housing able demand for buying,” he chief economist, Daryl Fairmarket and broader econsaid. struction. But Fairweather Fratantoni noted this is sees a shift toward a less weather, predicts mortgage omy normalize next year,” good news for home buyers. frothy market. “2022 will rates to rise to 3.6% by the said NAR chief economist With more new-construction bring more balance to the end of 2022. While rising Lawrence Yun. “Slowing homes hitting the market, he housing market,” she says. rates can be scary, keep in price growth will partly be mind that rates are still at the consequence of interest expects a slow-down in price Home value will slow historically low levels. Berate hikes by the Federal Re- growth. from record pace fore the Great Recession of serve.” Real estate investors Economists generally 2008, mortgage rates never If the 2022 predictions will continue buying agree that the blistering pace come true, buyers and sellfell below 5%. According to Danielle of home price appreciation What does this mean for ers can benefit from a more Hale, chief economist at Rewill slow significantly in home-buyers? Assuming stable market, allowing for rates rise from 3% to 3.6%, a 2022. Notably, most econobetter planning and budget- altor.com, as home prices $300,000 loan will cost buymists do not foresee a drop ing. In the latest report from and rents rose in 2021, real the Federal Reserve, the real estate investors continued ers an extra $100 per month. in prices, only a slowing of the current trends. estate component of house- to be net buyers of sinBuyer demand and A NAR survey of more hold net worth increased gle-family homes. “In 2022, competition will decline than 20 economic and hous- $1.4 trillion, mainly due to investors will continue to see In 2021, an unprecedented ing experts predicted that home price gains. solid returns from their insurge in buyer demand reWhile home price appreci- vestments in the housing annual median home prices
US mortgage rates hit 3.69%, highest level in 2 years ASSOCIATED PRESS WASHINGTON — Average longterm U.S. mortgage rates jumped last week to their highest level in more than two years, potentially bumping some homebuyers out of the market with Americans getting squeezed by higher costs for just about everything. The average rate on the 30-year loan jumped nearly a quarter point to 3.69% last week, mortgage buyer Freddie Mac reported Thursday. After rising nearly a half-point early in the year, the average long-term rate had been flat for three weeks. A year ago, the long-term rate was 2.73%. Although it’s still historically low, the average rate for a 30-year mortgage hasn’t been this high since the first week of January 2020 when it was 3.72%. The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, was 2.93%. It stood at 2.77% a year ago. The Federal Reserve has signaled that it would begin the first in a series of interest rate hikes in March, reversing pandemic-era policies that have fueled hiring and growth but also contributing to inflation levels not seen in some 40 years. The Labor Department said Thursday that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982. Higher costs for everything has hammered consumers, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.
market,” she noted in her 2022 National Housing Forecast. “2022 will be an excellent opportunity to receive high yields given the solid demand and projected rising rental prices.” Most pandemic-era eviction protections have been lifted, and 2022 may offer a glimpse of a more typical return of supply-and-demand economics in the rental market. By all accounts, real estate investments have seen a significant boom during the pandemic, with REITs up nearly 29% last year. Be prepared to buy or sell in 2022 Regardless of housing market trends and predictions, it’s a good idea to prepare before buying or selling a home. Danielle Hale recommends that buyers carefully examine their budget before starting a home search. Higher mortgage rates and increasing prices will affect affordability and monthly payments, so it’s a good idea to stick to a pre-determined budget. Homeowners preparing to sell are in a good position going into 2022. Home values are predicted to continue their upward march, albeit at a slower pace. As the market begins to stabilize, Hale notes that sellers should be prepared to face potential competition, but fairly-priced homes will continue to sell quickly in many markets across the U.S.
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s we embrace 2022, we would like to express our deep appreciation to our clients. We are grateful for your continuing support and trust, and pledge our continuing support to you throughout the year and beyond! We are all moving forward together!
With Much Aloha,
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