When it comes to interesting and quickly changing trends in the real estate industry, 2022 has definitely been a banner year. As we finish up Q4, let’s take a look at some of the latest trends and news that are currently impacting the real estate market.
If it seems like more communities than ever are part of a homeowners association (HOA), you are correct. The vast majority of newly constructed homes are now in an HOA, and in general, just over half of homeowners live in an HOA community. If you not only live within an HOA but work for one that needs help managing its finances, consider opening an HOA checking account that can be used to pay for the frequent expenses that come up. For example, Western Alliance Bank offers an HOA checking account with no fees and that pays a competitive rate. People who work for the HOA can write as many checks as they need for everything from repairs to paying vendors at community events, and it does not require an opening deposit.
Another current trend in the real estate industry pertains to the rapid rise of interest rates. In late October 2022, the average 30-year fixed-rate mortgage was 6.94 percent, which is 3.85 percentage points higher than a year ago, according to Freddie Mac. This increase in rates has been caused by an overall escalation in interest rates across the economy, which have been due to high inflation.
For some time, there simply were not enough homes for sale to meet the buyer demand. During the pandemic, this situation grew even more dire, making it hard for people to achieve their dreams of home ownership. Housing inventory, while not bursting at the proverbial seams, is on the rise, increasing almost 31 percent in late summer 2022, according to data posted by Ramsey Solutions. Overall, the number of active home listings is still about 40 percent lower than they were three to five years ago, and these houses tend to sell pretty quickly.
The lack of a glut of homes for sale has caused house prices to rise quite a bit since the pandemic first hit. Currently, prices are up to 40 percent higher than they were in 2020, but this increase may not last forever. The increase in mortgage rates, along with the risk of a recession in the near future, means that these prices may start to come down.
One lesson that the pandemic has taught us is that many tasks can be accomplished online. This is definitely true for home closings. While signing the closing paperwork has traditionally meant meeting in person at a bank or other location, the digital approach to closing continues to be a popular trend as 2022 draws to a close. Thanks to electronic signature apps like DocuSign and other online services, it is easier than ever for home buyers to complete the copious amounts of paperwork, all from the comfort of their couch.
When it comes to interesting and always-changing trends, it is hard to beat the real estate industry. While some of the current Q4 trends, like the popularity of HOAs and need for related bank accounts, will undoubtedly hold steady, the interest rate and home inventory situation may change significantly in 2023. By continuing to watch the market and take appropriate steps, HOA managers, home sellers and buyers should be able to weather these trends as effectively as possible.