By Kevin Haas
Rock River Current
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ROCKFORD — Real estate records fell month after month last year, with 2021 ending with record high home sale prices and record low number of days properties spent on the market.
Can 2022 be another blockbuster year? Or will rising interest rates and an increased inventory of homes for sale slow the seller’s market?
Related: ‘Remarkable and unparalleled’: 2021 a record year for Rockford real estate
Here’s a look at five expectations for 2022 from the Rockford Area Association of Realtors:
Inventory crunch continues
The Realtors group expects inventory to rise slightly because historic high home prices encourage people to sell. However, with housing construction still minimal, it won’t be enough satisfy the pent up demand.
Last year, the Rockford region had 3,118 fewer homes on the market during the calendar year compared to 2020. And it was the lowest average monthly inventory of homes for sale in records going back to 1998.
Interest rate increases
Mortgage rates rose to 3.22% in January, the highest level since May 2020. It’s also more than a half-percent higher than January 2021, when the rate was 2.65%.
Low interest rates, in part, spurred last year’s record-setting real estate run. Rising interest rates should slow that pace, Rockford Area Realtors CEO Conor Brown said, but not by much.
“As long as we don’t see anything rapidly change in terms of interest rates, if it’s a little bit more slow and methodical, I don’t think that’s going to have an enormous effect,” Brown said. “But, it’s certainly something we’re going to keep an eye on.”
Sellers keep an upper hand
The organization expects sales and price growth to cool off this year, but it won’t be enough to flip it into a buyer’s market.
Related: ‘Just let me buy a house’: Hot Rockford real estate market creates bidding wars for buyers
“The frenzied housing market last year was one for the books,” Brown said. “The ongoing pandemic, the way Americans live and work, historically low mortgage rates, to name just a few factors, should come together to create another dynamic year for Rockford real estate.”
Quicker home sales
The low inventory of homes for sale and rising interest rates could lead to an even faster pace for homes to sell.
That prediction comes even as the region saw a record low average of 22 days on the market before sale. That dropped from 42 days the year prior.
According to data from the real estate brokerage Redfin, more than 60% of homes went off the market in two weeks in 2021.
More first-time home buyers
A record number of millennials will reach key age milestones for homebuying this year and in 2023, according to Zillow.
First-time home buyers are, on average, 32 years old, according to SoFi.
In 2021, there were nearly 200,000 more 31-year-olds in the country than 32-year-olds. This year will feature the biggest increase in the number of 32-year-olds since the transition from Generation X to millennials, according to Zillow.
“A wave of first-time millennial home buyers entered the explosive 2021 market eager to own homes and raise their families,” Rockford Area Realtors said in its list of expectations. “More millennials will be willing to take risks to buy their first home in the coming year as they’re concerned about continually constricting market factors.”
This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on Twitter at @KevinMHaas.