NORFOLK, Va. — For more than a year, housing prices in Hampton Roads and across the nation jumped significantly.
Peter Shaw, a professor of business administration at Tidewater Community College, said a lot of people overpaid for a home in 2021.
The supply of houses on the market dropped by 54% from June 2019 to June 2021.
“So that’s a big chunk of the market of the supply-side: boom, gone,” Shaw said.
He said it led to supply shortages, which drove up housing prices by about 7%. He's predicting prices could increase by about 4% in 2022.
“It’s not rising as fast," Shaw said. "Part of that reasoning, I believe, is due to the rising interest rates and mortgage rates.”
Mortgage rates are expected to rise by roughly 4% by the end of 2022, according to the Virginia Association of Realtors.
For people who are renting, you’re looking at about a 7% increase.
“If a lot of them are renting for up to a year at least, and more are coming on board, I suspect the rental market is going to be quite hot for another year,” Shaw explained.
Supply chain issues could wane as the market ramps up construction by about 10% compared to 2020.
“The supply chain should be catching up, but still, will the prices for raw materials still be what they were pre-pandemic? I don’t think so,” he said.
Shaw said in December 2021, the market was still behind pre-pandemic levels and recovery would likely take a few years.