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10 Housing Market Records Broken in the Last 3 Months

There are plenty of ways to describe today's housing market -- hot, fast, tight. But these 10 records show exactly how unusual it is.

February 24, 2022
February 24, 2022
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If today’s homebuyers feel like Lewis and Clark exploring the Louisiana Purchase or Neil Armstrong stepping foot on the moon, it’s for good reason.

The housing market has evolved rapidly in the last two years and presented new challenges and opportunities. It’s also developed a habit of breaking records and redefining what’s considered normal. (What version of “new normal” are we on now, anyway?)

In just one quarter, at least 10 housing market records have been re-written. Here they are in no particular order.

Inventory hit at a record low

In January, the number of homes up for saleknown as active listings – hit a record low. The exact number of active listings depends on who you ask, but most sources are reporting record low inventory.

According to Redfin, active listings were down 17.8% from the previous year and no metro areas saw an increase in the number of homes for sale. Redfin’s data shows:

  • 1,323,200 total homes for sale (seasonally adjusted)
  • 558,400 new listings (seasonally adjusted), down 12.4% from the previous month reported a not seasonally adjusted level of 408,922 active listings in January, down from over 1 million at this time two years ago.

Housing inventory is typically at its lowest in January and it should start climbing as the market heads toward peak season. However, housing supply has a historically large hill to climb and record-low inventory is a contributor to several other housing records.

Bidding wars are at an all-time high

If David Attenborough’s nature documentaries have taught us anything, it’s that scarcity breeds competition. The rate of bidding wars hit an all-time high in January with 70% of homes receiving more than one offer, according to Redfin.

Townhomes saw the highest share of bidding wars (72.6%), followed by single-family homes (70.6%), condos/co-ops (62.9%), and multi-family properties (62.7%).

The top 5 metros for bidding wars in January were:

  1. Spokane, Wash. - 83.3%
  2. Sacramento, Calif. - 80.4%
  3. Seattle - 79.7%
  4. Dallas - 78.1%
  5. San Francisco/San Jose - 76.5%

On the less competitive end, Nashville, Oklahoma City, Las Vegas, New York, and Cincinnati each had bidding war rates below 56%.

Investors are purchasing a record share of homes

Investors small and large – from two-property mom-and-pop operations to massive Wall Street firms – have grown fond of buying single-family homes to flip and rent during the pandemic. That’s because low mortgage rates and skyrocketing property values make SFH rentals an ideal hedge against inflation.

In the fourth quarter of 2021, investors made up a record 18.4% of all home purchases – up from 12.6% the year prior, according to Redfin. Nearly 75% of those purchases were single-family homes.

To be fair, the exact share of investor purchases and whether it’s a record or not depends on who you ask.

Investors bought 18.4% of the U.S. homes that were purchased in the fourth quarter, a record high.

— Taylor Marr (@tayloramarr) February 16, 2022

While Redfin claims 18.4% is a record, data from John Burns Real Estate Consulting shows that investors made up 24% of the market in the third quarter of 2021, which was not a record since investors made up nearly 30% of the market in early 2010’s.

Here is what our data shows. Rising but nowhere near a record high.

— John Burns (@johnburnsjbrec) February 16, 2022

This is good and bad news for homebuyers. On one hand, Wall Street is tipping its hand that real estate is a great investment. On the other, homebuyers in some markets may find themselves competing with investors armed with cash (see David Attenborough reference above).

New home construction sets two records

After a decade-plus of underbuilding following the 2008 market collapse, homebuilders are racing to provide new inventory to meet robust demand.

In December 2021, newly built homes made up a record 34.1% share of the single-family home inventory. That’s up from 25.4% the year before and well above the early 2010s when new builds made up less than 10% of SFH supply.

Homebuilders are also spending more than ever. In December, residential construction spending reached a seasonally adjusted rate of $810 billion per year.

Although spending is at an all-time high, builders are completing single-family homes at a fairly average rate of 1 million units per year. The additions building costs are due to lot, labor, and supply shortages from the pandemic.

There are a record number of “million-dollar cities”

Due to (you guessed it) record home appreciation in 2021, there are now a record 481 “million-dollar cities” in the US, according to Zillow.

“Million-dollar cities” is defined by Zillow as cities that have a “typical home value” of at least $1 million dollars.

A record 146 cities joined the club in 2021. Most are located in large coastal metro areas, although migration to rural areas during the pandemic gave rise to the first million-dollar cities in Idaho, Montana, and Tennessee.

There are 76 million-dollar cities in both the greater San Francisco and New York metro areas, and nearly half (44%) are in California.

The average mortgage payment is at a record high

Due to rising interest rates and home prices, the average mortgage payment reached an all-time high $1,997 in February, according to Redfin. That’s up 27% from the same period last year.

But it’s not quite time for sticker shock. People may be spending money on mortgage payments, but they're not yet spending a record share of their income to make those payments.

Thanks to lower interest rates and higher incomes, people are spending a smaller share of their income on mortgage payments than they were in 2006 and 2007 when the median home cost less than $250,000.

A record share of people think its a bad time to buy a home

In January, a survey by Fannie Mae found that a record 70% of people thought it was a bad time to buy a home while just 25% thought it was a good time to buy a home.

But this poor sentiment didn’t show up in the market. Existing home sales increased 6.7% from December to January, despite record-low inventory and fast-rising mortgage rates.

The home appreciation streak continues

Move aside Cal Ripken Jr, the housing market is working on an Iron Man streak of its own.

Home prices have appreciated year-over-year for a record 119 straight months, according to the National Association of Realtors.

That’s roughly 10 years or 3,500 days-worth of rising home values – a dream come true for homeowners.

For reference, the streak started in February 2012, when Kelly Clarkson’s “Stronger” was #1 on the Billboard Hot 100.

Single-family rents are growing at a record rate

If you think it's cheaper to rent than buy a single-family home, think again. Rent rates for single-family homes grew by a record 7.8% in 2021, according to CoreLogic.

In December, rental prices for detached homes were up 12.1% year-over-year, while rents for attached homes grew 11.4%.

The Miami-Miami Beach-Kendall metro area in Florida saw a jaw-dropping 35.7% annual rent increase in December – by far the greatest of any US metro.

Rental price growth was greatest among lower-middle and higher-middle priced units.

Vacancy rates are at a record low

In the fourth quarter of 2021, just 0.9% of homes were vacant in the US. This ties a record low that prior to the pandemic hadn’t been reached since 1978. For reference, 1.4% of homes were vacant prior to the pandemic.

Vacancy rate is another measure of housing inventory. The record-low rates depict how tight housing supply is, which is driving competition and price growth.

There you have it. Ten records in three months.

That’s gotta be some kind of record.

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