National Real Estate Trends 2022

Throughout the country, the effects of an economic downturn are being felt and the housing market is showing signs of a cool-down after two years of unprecedented growth. The first eight months of 2022 home prices continued to rise, and home buyers are hoping that 2023 will revert to more normalized conditions.

According to the Federal Housing Finance Agency, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012. Home price gains in the 3rd quarter of 2022 remain high. Nationally we saw 12.4% appreciation from the year prior and .01% growth from the previous quarter. There have been 8 consecutive quarters of double-digit annual growth and 43 quarters of positive appreciation which dates back to 2012. The top 5 states with the highest appreciation in Q3/22 are 1.) Florida 22.7 percent, 2.) South Carolina 18.4% percent, 3.) Tennessee 17.9 percent, 4.) North Carolina 17.3 percent, and 5.) Georgia 16.6 percent. The areas showing the lowest annual appreciation were: 1) District of Columbia 1.8 percent; 2) Oregon 7.6 percent; 3) California 7.6 percent; 4) Minnesota 7.7 percent and 5) Louisiana 8.3 percent.

Over the last four quarters, house prices rose in all but two of the top 100 largest metropolitan areas. Annual price increase was greatest in North Port-Sarasota- Bradenton, FL, where price increased by 29.2 percent. The only metropolitan areas that experienced price declines were San Francisco-San Mateo-Redwood City, CA and Oakland-Berkeley-Livermore, CA, where prices decreased by 4.3 percent and 0.6 percent, respectively.

An interesting shift has emerged over the last two quarters, which is a deceleration or slower positive growth. When we look at the monthly appreciation in 2022, five of the nine regions have experienced negative monthly growth. The last time that happened was in May 2020 due to Covid-19, but prior to that was in January 2012, before house prices began to ascend. The October 2022 Home Price Index rose 9.8 percent over October 2021. “Higher mortgage rates continued to put downward pressure on demand, weakening house price growth. The U.S. house price index growth decelerated as it posted the first 12-month growth rate below 10 percent after 24 consecutive months of double-digit appreciation rates.” said Nataliya Polkovnichenko, Ph.D., Supervisory Economist, in FHFA’s Division of Research and Statistics.

Throughout the country, permits and sales are softening, supply is picking up, price reductions are becoming more frequent, and homes are taking longer to sell than in 2021. However, luxury real estate remains an outlier because inventory hasn’t caught up with the current demand. With a strong demand for luxury listings, limited inventory and fewer new-construction starts, prices should be insulated from seeing any dramatic declines.

Luxury Real Estate Trends

According to Engel & Völkers Trend Report “The luxury home market will continue to thrive and will be driven by millennials [those born between 1981 and 1996]. This represents a significant shift as baby boomers have long driven both the buying and selling sides of the luxury real estate market and as such, is also indicative of a massive transfer of wealth and assets, including property, from boomers to millennials.” They predict that half of all luxury home buyers in North America will be millennials, who have more flexibility to work remotely and aspire to own multiple homes. Since many have children in their households, it is likely they will still maintain a primary residence.