In recent years, the housing market has been strengthening, particularly during the COVID-19 pandemic. Home prices increased, buyer demand increased, and mortgage rates fell to new lows. In the end, it's turned housing into one of the few bright spots in an otherwise bleak situation. The property industry, however, is constantly changing, and real estate trends come and go. When you consider how localized this sector is, with varied conditions in every city, state, and metro area, you can't expect things to stay the same for long.
2021 Restate Recap
Fortunately, knowing the market's fundamentals can help you remain on top of all of these shifts. Scroll down for the most up-to-date real estate trends of the month, and check out some of those fundamentals below.
House prices are affected by a variety of factors, including local buyer demand and the amount of available housing supply. In general, rising property prices are caused by high demand and low supply.
Mortgage rates, which influence demand, can also play a role. When interest rates are low, people are more interested in buying houses. Demand may dwindle as interest rates climb. Home prices have been rising at a nationwide level for some time. The median home price was slightly under $17,717,993.50 by the end of 2020. In the year 2020, home prices increased by 11%.
Overview of Interest Rates Between 2020 and 2021
Mortgage interest rates have a significant impact on demand, home prices, and affordability in the housing market. They also change on a daily basis due to a variety of factors such as the bond market, investor interest in mortgage-backed securities, and, of course, inflation. According to Freddie Mac, mortgage rates were hovering at all-time lows in early 2021. In January, the average rate on a 30-year fixed-rate mortgage was 2.74 percent, up from 3.62 percent the previous month and 4.76 percent a decade before.
December 2021 Insights
The amount of new properties on the market in November 2021 has increased significantly. The number of new property listings grew by 12.1 percent month over month, reaching its biggest monthly total in seven years. Although search volumes and inquiries have decreased as the volume of merchandise for sale has increased, weekly sales volumes have continued to rise, and the median number of days on site has remained at historic lows.
The market shift is something we generally see at this time of year, so it's seasonal. However, the slowing of property searches and enquiry volumes has been bigger than in previous years. This could indicate that some of the market's ferociousness is dissipating. With the increased storage needs for supermarket products, fast-moving consumer goods, and the COVID-19 vaccinations, cold-storage logistics has piqued the interest of a variety of market actors. After a long period of stagnation, the decision to ease domestic travel restrictions has re-energized the travel and tourist business.
While it appears to considerably improve hotel operators' operational performance, the new Omicron model remains the greatest threat in terms of opening up international borders, which might throw the country's recovery into disarray.
KMC reported a small increase in lease activity in the 'conventional' real estate asset classes, such as office, retail, and residential, as the government continues to ease restrictions and relieve lockdowns. However, statistics from the third quarter of 2021 revealed that demand is still sluggish as corporations and organizations consider decentralizing their staff and opting for more flexible work arrangements such as hub and spoke.
Another major aspect in the housing market is housing inventory, or the amount of homes currently available for purchase. A seller's market occurs when inventory is low and demand is high. Home prices climb, bidding wars develop, and sellers gain negotiating leverage. Buyers, on the other hand, tend to have the upper hand when inventory is high. There are more available listings than there are buyers to acquire them in a buyer's market. As a result, price rise is slowed, and the market becomes less competitive overall.
In terms of current inventories, supply has been extremely low in recent years, and the coronavirus epidemic has only made matters worse. With sellers wary of allowing strangers into their houses, as well as a lot of economic uncertainty, the number of for-sale postings dropped dramatically in 2020, reaching its lowest point ever. However, the Philippines remains a desirable commercial location, particularly for industrial real estate. We can expect additional bright spots in the sector for 2022 with increased government support in terms of infrastructure and ease of doing business.
Market Caveats
Another major aspect in the housing market is housing inventory, or the amount of homes currently available for purchase. A seller's market occurs when inventory is low and demand is high. Home prices climb, bidding wars develop, and sellers gain negotiating leverage.
Buyers, on the other hand, tend to have the upper hand when inventory is high. There are more available listings than there are buyers to acquire them in a buyer's market. As a result, price rise is slowed, and the market becomes less competitive overall.
In terms of current inventories, supply has been extremely low in recent years, and the coronavirus epidemic has only made matters worse. With sellers wary of allowing strangers into their houses, as well as a lot of economic uncertainty, the number of for-sale postings dropped dramatically in 2020, reaching its lowest point ever.
A Glance of Real Estate in 2022
The future of the real estate industry in the aftermath of the Covid-19 pandemic appears to be brighter in 2022, as demand for luxury and mid-income residential projects shows signs of improvement. Residential developments in the luxury and mid-income segments are viewed as bright areas for the industry, according to Colliers International Philippines' real estate experts, and developers are queuing up projects to seize recovery. They cited the expedited pace of the government's vaccination rollout as one cause for the revival in residential sales, as well as the "subsequent reabsorption of office space," which would play a key part in the sector's recovery. The government's vaccine rollout, as well as the resulting reabsorption of office space, are projected to support residential demand.