Low inventory likely to keep housing market competitive in 2022

Toward the end of 2021, my colleague Chris Pardo and I each took a look at where the real estate market might be headed this year (here and here) and we had similar conclusions: Buyer demand and prices will likely stay elevated while inventory struggles to keep up.

The inventory issue is worth looking at a little closer. The article below from Fortune takes a deeper dive into exactly what’s happening on the supply side. One striking stat they referenced: Among the 327 housing markets tracked by Zillow, 254 have inventory levels that are down by more than 30% between December 2019 and December 2021. Take a look at the map Fortune shares in the article and you’ll see just how prevalent this is across the U.S.

More recent data from Zillow adds to the picture, and they note that “there were fewer options for would-be home buyers on the market at the end of 2021 than any time in recent memory.”

As Chris touched on in his year-end article, builders are having a tough time ramping up construction as they deal with shortages in workers and materials, compounded by the global supply chain backups. With the issue being so widespread across the U.S., it will certainly take time for construction to catch up with buyer demand, and that means home prices should continue to climb as buyers remain heavily interested in the relatively small number of properties that are for sale.

Fortune notes that rising mortgage rates in 2022 might eventually push prospective buyers out of the market and put downward pressure on prices. A cooling of the market could also allow homebuilders to catch up a little bit more, but the short-term forecast is for demand to continue outpacing supply. Mobility teams should continue to provide ample support to relocating employee who are looking to buy a home in this challenging environment.