Records Smashed in 2021

Ever the record setting year, 2021 also had the highest jump in home prices in recorded history. As reported in a feature by National Public Radio, the year ended with a nationwide median home price of $346,900 which was up 17% from 2020. This made it all the more difficult for first time home buyers to enter the market, though feels like a win for those who already own. 

This same jump in home price spelled out increased equity of over $50,000 in a single year. 

The chief economist for the National Association of Realtors, Lawrence Yun, says that, “the price increase is a record.” He goes on to explain why this moment in time is different from the era of subprime lending seen in the early 2000s, just before the housing bubble burst in 2007.

Are We Headed for Another Burst?

Back then, prices were inflated because people were being approved for loans on homes they couldn’t actually afford. Nowadays, prices are so high because not as many people are selling. There’s scarcity in the market. When you have huge demand and low supply, that will drive up the cost of homes rapidly. 

 “We are facing a major housing shortage,” Yun says. “In December, we saw record low inventory, an all time low, there’s simply not enough homes available for sale.”

Yun believes home prices will begin to normalize in 2022 as national mortgage rates tick up and as more and more new construction permits are being pulled by builders.