From lumber to groceries, from cars to toilet paper, the COVID issues have thrown the US supply chains into turmoil. None as drastic as the US housing market. Looking at the chart above, you can see that home listings have been above 1.5 million for the past 20 years. In the past year, we dropped as low as 1 million listings. This housing inventory shortage has driven home values to stratospheric levels. As we come to the end of 2021, the tide is beginning to turn. Building permits are up, lumber prices are back in a semi-affordable price range, and home listings are beginning to move back above 1.5 million nationwide. So, what does this mean for your business in 2022?
Here are my predictions of trends in 2022 related to this housing trend:
- Mortgage refinances will begin to decline. Over the past few years, many mortgage companies didn’t even have to market as they were inundated with mortgage refinance applications. Mortgage rates were at historical lows. The most astute lenders struck while the iron was hot, marketed like crazy and built a portfolio of low interest rate loans. In 2022, mortgage lenders will have to move more into an acquisition mode to gain new mortgages. Cash-outs will replace rate and term refinances as the main driver of mortgage refinancing.
- Home Equity loans will make a big comeback. Since the mortgage collapse in 2008, home equity products have taken a large drop in volume. Home values were crushed, lending criteria tightened and home equity took a backseat to other mortgage products. Now that many homeowners have locked in low rates and are sitting on huge amounts of equity, the demand for home equity products will increase. Also, the average balance of home equity loans will increase as well.
- Huge increases in homes needing repair. Foreclosures have been on a government-induced hiatus for over a year. With these mandates expiring, lenders will begin to pursue foreclosures on an estimated 1+ million homes that are 90+ days late. This will result in an unprecedented volume of homes hitting the market for home investors or homes needing some level of repair and remodeling. Home construction and remodelers will be in high demand.
- Fintech companies offering unsecured loans will increase volumes. With homes going in foreclosure and government stimulus checks drying up, short-term cash needs will increase. As these loans, led by Goldman Sachs’ Marcus, continue to get more competitive for good credit consumers, the volumes will increase exponentially in 2022.
Again, these are just one old guy’s opinions. But, if you are a marketer or an agency, consider the impact of the home listings and likely peripheral impacts to your products, services and projects.