Report
April 6, 2022
Key takeaways:
- The 10-year old seller’s market continues, evidenced by:
- Strong volume, in spite of a cumulative 31% increase in constant quality home price appreciation (HPA) since January 2020,
- Historically tight supply, §The work from home revolution, and
- Arbitrage opportunities due to wide intra-metro, regional, and national pricing differences.
- Purchase volume for week 13, while up 1% over 2021, compares favorably with 2019. However, HPA remains strong. With no supply relief on the horizon, we expect y-o-y HPA to remain at 15-20% at least until rates are upwards of 6%. Then demand should drop and supply should grow, with the greatest impacts felt at the high end of expensive markets and low end of some FHA markets.
- The Fed’s accommodative monetary policies of near-zero interest rates and quantitative easing have resulted in a wealth effect from the $18 trillion in stock market and home price appreciation gains. This wealth effect is driving strong demand pull inflation. These policies are also making homes increasingly unaffordable for potential low-income homebuyers. At the same time, general inflation is driving up the cost of food, energy, and other necessities.
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