Housing Market News for the Week of January 14, 2022

Owners Average $225K in Housing Wealth Over Decade

Homeownership continues to prove it can pay off over the long term. It is the largest source of wealth among most families, and it’s been paying back more lately.

Equity gains are increasing, making homeownership even more profitable: A homeowner who purchased a single-family existing home 10 years ago would have gained $225,000 in home equity if they sold at the median sales price of $363,100 in the third quarter of 2021, Gay Cororaton, a National Association of REALTOR® research economist, says on the association’s Economists’ Outlook blog.

Philadelphia Named One of the Most Affordable and Trendy Cities for 2022

Trendy AND affordable? Philadelphia is one of those cities.

According to Realtor.com®, Philadelphia is the third trendiest and most affordable city in the country, thanks to a plethora of social activities, such as breweries, yoga studios and independent cinemas, as well as affordable homes, making it an opportunity for first-time buyers to participate in.

“There are so many areas of the city that fly under the radar that are seeing great rejuvenation. They may not be the hip places everyone is talking about or some of the areas that are getting a lot of press,” said PAR President-elect Al Perry. “But areas like Southwest Philly and Mayfair offer a lot of affordable housing.”

The median listing price of a home in Philadelphia is $312,450, below the current national median list price of $379,000. However, there are plenty of properties available for more affordable prices, Perry said.

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Roaring U.S. Housing Market May Cool But Keep Climbing as Fed Ends Emergency Support

U.S. home prices roared almost 20% higher in the past year, giving families who own properties a major boost to their finances during the pandemic.

But Wall Street, a key source of home mortgage finance, sees important questions ahead for the red-hot housing market, now that the Federal Reserve has shifted its focus to tackle inflation as the economy recovers from the pandemic.

“House price appreciation was a significant contributor to growing household net worth and will likely slow due to higher interest rates and declining affordability,” Brad Tank and Neuberger Berman’s fixed-income investment strategy team, wrote in their first-quarter outlook.

Here’s How to Prepare if You Want to Buy a Home in This Competitive Market

Brace yourself for another competitive year in the housing market.

Home sales are expected to grow 6.6% in 2022, a 16-year high, according to Realtor.com. The typical winter lull isn’t even necessarily happening. Home prices actually accelerated from November to December, said Danielle Hale, chief economist at Realtor.com.

While Realtor.com is forecasting prices will rise 2.9%, the pace is slower than last year. Inventory will remain limited, but is expected to rebound from 2021 lows.

Buyers Rushing to Lock In Mortgages

The housing market doesn’t appear to be following its typical seasonal slowdown this winter. Home buyers appeared in a rush last week, with economists crediting rising mortgage rates.

Mortgage rates moved to their highest level in more than a year, the Mortgage Bankers Association reports. Buyers who are already facing higher home prices are watching mortgage rates closely as they affect what shoppers can afford.

Mortgage purchase loan applications increased 2% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase applications, however, are 17% lower than the same week a year ago, but real estate pros say that is primarily due to low inventories of homes for sale. They reported to CNBC anecdotally higher-than-normal activity in early January from home shoppers.

Mortgage Market Update

Mortgage rates rose across all mortgage loan types, with the 30-year fixed-rate mortgage increasing by almost a quarter of a percent from last week. This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains. The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future.

We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.

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Information and analysis is obtained through third parties and is deemed accurate but not guaranteed. Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.