While 2021 lacked the extreme drama of 2020’s lockdown and whipsaw recovery, it was by no means a balanced or easy-to-navigate market. Just like the previous year, ‘21 lacked sufficient inventory to satiate the demand that many buyers brought to bear. Fueled by first-time buyers, King County migrants, and newly minted “work from homers,” properties of all sizes were in demand.
A Lookback at Inventory & Appreciation
The Pierce County real estate market began the year with fewer than 500 homes available, and the supply was able to peak during the month of June at just over 2,500 homes for sale. While the headlines for most of the year touted low inventory, it’s interesting to look back and realize that the region saw the quantity of listings taken throughout the year totaled 103% of the 4-year average. This tells us that inventory was not so much low, but rather it was being voraciously consumed by the high demand at such a rate that when it was measured, there appeared to be nothing for sale.
As the inventory started to build during the 2nd quarter of 2021, the competition was fierce with sellers establishing offer review dates and multiple offers being the norm. Buyer fatigue set in during the 3rd quarter, and many were exhausted from offering and not winning. Others were dissuaded by the rapid price appreciation that was happening right before their eyes that was either mentally—or actually—pricing them out. Pierce County’s housing prices rose over 17% during 2021. This double-digit gain came on the heels of 2020’s impressive 15% uptick.
Addressing Rumors of a Real Estate Bubble
Throughout the mid-year cycle, the rapid price appreciation of Pierce County housing caused many to toss around the “bubble” word while others predicted a tsunami of foreclosures once the eviction moratorium was lifted. The bubble argument is crushed by many economic factors, the 2 most prominent being:
- SUPPLY: Entering the downturn that began in 2007, Pierce County had 7,964 houses for sale. In 2021, we saw an average of 760 homes for sale week by week.
- DEMAND: There will be 10 million Millennials turning 30 in the next 2 years. They are the largest cohort of the home buying population by far, and they are decidedly interested in setting down roots and owning a home.
The foreclosure wave was never to be, simply because banks do not have the appetite to foreclose en masse like the last go around AND price appreciation has been too great. For any homeowner who could not cure their mortgage woes, they simply sell and rake in the equity they’ve gained in recent years.
Looking Toward 2022
In the context of the real estate market, 2021 will likely be remembered as the first year of a “post-covid” new normal for a few years to come. As we head into 2022, demand may calm a bit as the higher prices and predicted increase of interest rates cause some price affordability issues. However, with no near term solution to supply the many demands on the Pierce County real estate market combined with a median price that remains 49% less expensive than our neighbor to the north, the Pierce County housing market is poised for another out of balance market in 2022.
Thinking about buying or selling a home in 2022? It’s never too early to connect with me.