Richard Torne has an interesting piece for Mortgage Professional America, 2022 “probably going to be one of the worst years in mortgage banking”, which real estate investors should definitely pay attention to. He has a look at whether or not we could possibly see a slowdown in the real estate market.
He wrote, “Despite record home appreciation, 2021 proved to be the strongest year in sales since 2006, with more than 6.1 million homes sold – an increase of 8.5% from 2020, according to the latest figures from the National Association of Realtors (NAR).”
This is definitely in contrast to what some hot real estate markets are seeing, even when seasonally adjusted. In what may prove to be the biggest concern for 2022, inflation could put pressure on the real estate markets.
While the news initially looked really good he goes on to show the data for 2022 hasn’t started out great, “According to NAR, sales of previously owned homes fell by 4.6% last month. They were also down 7.1% year over year.”
Will Inflation Slow Down the Real Estate Market?
Mr Torne wrote, “2022 started with a worryingly high inflation rate – 7%, the highest in almost 40 years, and up from last month’s 6.8%. To rein in inflationary pressures, the Federal Reserve now contemplates increasing interest rates by up to four times during the course of the year.”
For many investors even those in hot markets, when out finding a rental property to buy it is going to pay attention to inflation as it could continue to have a pressure on the market especially if rehab materials continue to climb along with a slowing of home appreciation.