Thursday, March 3, 2022 / by Shane Kilby
What we expect to happen in our 2022 North Alabama real estate market.
Today I’m going to talk about what’s going on in the North Alabama real estate market this year. This is the time of year when both buyers and sellers are getting ready to move. Clients always ask me around now, “What do the rates look like, and how much inventory do we have?” Let’s take a deep dive into our market stats and answer those questions.
Interest rates are forecasted to increase. We may see as many as four rate increases this year, but that is always subject to change. There will probably be 0.25% increases, but currently, we are looking at rates around the 3% to 3.5% mark.
Inventory always seems to be a hot-button topic. We have seen a tough, low-inventory market for the last 12 to 24 months. It’s gone as low as weeks’ or days’ worth of inventory. Right now, we have 2.5 months of inventory. We would like to see as much as five months of inventory to have a balanced market, but we expect that the rate increases will increase our supply somewhat.
A lot of sellers have been waiting to see how low rates would go, so now that they’re starting to climb, many of them are listing their homes. We expect inventory to loosen up, but not by much. However, it should give us a little bit of breathing room and help with the fatigue buyers are feeling.
We expect the costs of building materials to level out or drop since most workforces are back. If those prices do level out, it will create more opportunities for new construction. Combined with the interest rates, this should ease our inventory problems a little bit, but don’t expect us to have too much inventory this year.
As we rapidly approach the peak selling season in 2022, we expect demand to increase as most people focus on their housing hunting. We see the peak between February and July each year, and we don’t expect that to change this year.
Is it a good time to buy or sell? It is definitely a great time to sell, but it is also a great time to buy. People say that all the time, but I really don’t want the buyers to get discouraged. Even though inventory is tight and prices are up, the affordability is still very favorable. Wages and job opportunities have increased alongside housing prices. As interest rates continue to increase, your monthly payment will go up, so now is a good time to buy.
If you have questions about this update or any other real estate topic, don’t hesitate to call or email us. We would love to help you.