Monthly Market Report: November – December 2021
As we look back on 2021 and face a second COVID-battered year-end, a new normal is emerging. The business continues to boom in the real estate world, but the landscape and challenges have shifted dramatically.
Let’s wrap up this unforgettable year by revisiting how the industry has changed over the past 12 months.
Home prices soared throughout 2021 at a trajectory that was remarkably consistent
Unlike in 2020, home prices increased monotonically this year, streaking up at the same general trajectory since January. Price growth slowed slightly in the Bay Area and L.A. toward the end of summer, while N.Y.C.’s market lagged the national average — but shows no sign of slowing down.
Housing supply reached an all-time low this year, but seasonal changes in inventory have returned
The country is experiencing a never-seen-before housing shortage, with just over half a million homes for sale. But within this highly abnormal, hyper-constricted market, seasonal changes in inventory returned on schedule 2021.
Price segment was a large factor in inventory, both nationally and within large metros
With the end of forbearance programs nationally in the fall quarter, housing stock in the most affordable segments recovered the most year-on-year. Housing supply in the upper price segments, which are not affected much by forbearance, continued to decrease throughout the year.
Homes sold with astonishing speed all year and average days on market reached an all-time low
Average days on market decreased sharply at the beginning of 2021, reflecting intense buyer competition — and a willingness to forego standard contingencies. Homes in major California metros sell about twice as fast as even the accelerated national average.
Along with home prices, rents rose rapidly — especially in New York City
As cities began to open up and urbanites returned, average rent increased with home prices. New York City saw its average rent increase at twice the rate of the national average, though San Francisco continues to have the highest rents in the country.
Mortgage rates remain near historical lows but began trending upwards in the fall of 2021
Although mortgage rates remained low this year, many homebuyers could not take advantage due to a lack of inventory and soaring prices. Interest rates have been on the uptick as expected in the second half of the year, which was and will be bad news for buyers.
“The Great Reshuffling” was a popular pandemic story, but only a small proportion of people actually participated
Only a small portion of the workforce took part in the “The Great Reshuffling,” as remote-working was not the only factor. Among the 29% of people allowed to work remotely, more than four out of five have homes or families that make it more difficult to move to another state.
Do COVID spikes lead to home-buying frenzies? In 2021, prices did rise in the wake of major outbreaks
In LA County, since the pandemic started, the most significant increases in home prices occurred a few months after severe waves of COVID-19 cases. It remains to be seen whether the relationship between outbreaks and prices will continue. But with Omicron now spreading in the U.S., we are likely to have another chance to study that correlation.
There is never certainty in the real estate market, but it’s clear that the pandemic accelerated existing trends and created extreme buyer demand. What we know for certain is that with drastic changes come immense opportunities — and that with you on our side, we like our chances. See you in 2022!