(CNN)The US housing market has had a white hot year. Home sales are on track to reach the highest level in 15 years, with an estimated 6 million homes sold in 2021.
But whether you benefited from this surge depended a lot on if you were selling a home or buying one.
Homeowners saw average home prices skyrocket nearly 20% through the third quarter compared to a year ago, according to the Federal Housing Finance Agency. It was the largest annual home price increase in the history of the agency’s House Price Index. And, in some hot markets, the price increase was double that.
Homes also sold at a record pace, with sellers often fielding multiple competing bids and all-cash offers. Even homes that were disgusting or burned out sold quickly, and at amounts that were well over the asking price.
For buyers, it was a different story. While mortgage rates kicked off the year at record lows, it was difficult to even find a home to buy. Inventory of available homes reached an all-time low early in the year and competition was extremely stiff.
Many prospective buyers left the market dejected and without a home to call their own. As a result, demand for rentals surged and rents went up across the country.
“It was an insane year,” said Matt Holm, an agent with Compass in Austin. Last January, he put a smaller five-year-old home on the market at $425,000, higher than comparable sale prices, and was flooded with offers. “I stopped counting at 35 offers,” he said. The home sold for $545,000, a 30% increase over the list price.
Another buyer, who bought a lakefront luxury home for $6 million in 2020, was offered $9 million a few months later and $11 million two months after that by buyers desperate for a lakefront property, Holm said.
“My sellers said, that’s a lot of money,” Holm said. “They wanted to sell and get something as good or better. But they realized they shouldn’t sell because to get something a little bit nicer than what they had was going to cost $18 to $20 million. That is a remarkable jump for a calendar year.”
Without a doubt, the housing market was on a wild ride in 2021. Here’s what to expect as we head into the new year.
No more record low mortgage rates
The year began with the lowest interest rates on record, with average rates for a 30-year fixed rate mortgage at 2.65%. But they didn’t last long. By April 1, that had reached a 2021 peak of 3.18%. Rates have fluctuated since, with the 30-year fixed at 3.05% last week, according to Freddie Mac. And we can expect rates to move even higher in the new year.