US Home Inventory Falls Below 1 Million: What’s Next for Real Estate?

There’s one thing we’ve learned in the past two years since the rise of COVID: the future is never clear. Mauricio Umansky, founder and CEO of The Agency in Los Angeles, shares his predictions for the 2022 market.

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A pair that continues to rule in 2022: soaring demand and tight inventory. With remote workers entering new markets, buyers returning to cities, and a surge of first-time home buyers entering the market, demand has certainly outstripped supply, driving home prices to unprecedented highs. previous.

Yet despite tight inventory and rising prices, more than 6 million homes have been sold, the highest number since 2006. And according to Zillow’s recent report, active inventory fell below 1 million in December, nearly 41% lower than inventory levels two years earlier.

The question that many of us ask ourselves is: what lies ahead for the year? There’s one thing we’ve learned in the past two years since the rise of COVID: the future is never clear.

The future of work will almost certainly shape major markets. It remains to be seen whether companies will resume occupying large office spaces or opt for a reduced and more distance-oriented environment. Overhead cost savings could translate into higher wages, which could help balance the affordability issue.

What we can say with certainty is that there is no bubble to burst and a strong market is expected throughout 2022. Even though price appreciation is slowing this year, prices homes will still be 20% above pre-pandemic levels.

Even if mortgage rates continue to rise, they will still be more favorable than in the recent past. In the US, the Federal Housing Finance Authority is increasing conforming loan limits by a record 18% in 2022, the largest increase in history, and therefore increasing purchasing power in the US market.

I believe demand will continue to outstrip supply until more new construction projects make their way to market. Demand in the new construction sector is focused on turnkey and well-served offers, which bodes well for hotel brands entering the residential sector.

However, strict new development policies and high material costs across the world are currently not conducive to a major change this year. Still, construction of new homes has unexpectedly picked up speed over the holiday season, and some relief is hopefully on the way.

Just as in 2021, the number of homes sold will remain high, proof that the next generation aging in the residential market still sees real estate as vital, whether they rent or buy primary and secondary residences.

It remains to be seen how long and how much inflation will last and what effects it will have on global consumer spending, as people are less inclined to dip into their savings to buy, remodel or renovate. More and more governments around the world are taking action as they plan to intervene in the fight against inflation in the coming year.

As for luxury buyers, they still have enough disposable income to devote to both diversifying their portfolios and improving their lifestyles. Additionally, a new generation of buyers is here to stay, driving the push towards a mix of technology services and agents in the industry.

Across the market, people will continue to invest in real estate, whether they are looking for a place to call home, a vacation retreat or an income-generating property. After all, home is always where the heart is and where the big money is invested.

Mauricio Umansky is the founder and CEO of The agency in Los Angeles. Connect with him on instagram.

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