Two Years After a Costly Pandemic, the Housing Market Is on the Cusp of Big Change

The cost of homeownership has soared to historic proportions over the last several years, and to make matters worse, so too have prices for gas, food, and other necessary consumer goods. Americans are hurting in an overheated economy, but experts hope that the Fed’s recent inflationary control measures will rein in prices and put a damper on homebuyer demand.

According to Harvard University’s Joint Center for Housing Studies, home price appreciation reached 20.6% in March 2022, the largest increase in three decades of market recordkeeping. In the meantime, rents also shot up 12% nationwide during the first quarter of 2022. With a narrowing inventory of existing homes and apartments on the market, buyers and renters could be battling an affordability crisis for much of 2022, but prices in some regions are beginning to drop from peak highs.

Although leveling off from the record surge in 2021, both home prices and rents are still rising because of the severe constraints on supply. Indeed, the inventory of existing homes for sale set a new low of 850,000 units in January 2022 before edging up to 1.0 million units in April, still down 10 percent from the year-earlier level. Rental vacancy rates in the professionally managed apartment stock also reached an all-time low of 4.8 percent in the third quarter of 2021 and held at just 5.0 percent in the first quarter of 2022.

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