The asphalt economy is incredibly fascinating and sustainable. As of December 2021, asphalt is the most recycled material on Earth and can be used for roadways, parking lots, roof shingles, and more. With the current state of climate change and efforts to become more sustainable, asphalt recycling matters now more than ever. The United States is already heavily involved in the asphalt industry. In 2019, the U.S. produced 420 million tons of asphalt, housed more than 3,600 asphalt production sites, and owned 36 billion barrels of bitumen deposits.

What is asphalt? Asphalt, which is also referred to as bitumen, is a refined, solid-state petroleum made from distilling crude oil. Asphalt is a 100% renewable construction resource. Composed of five major elements, carbon, hydrogen, oxygen, nitrogen, and sulfur, asphalt is prized for its binding capabilities, structural strength, and temperature resistance. It is used to create many different types of surfaces; namely, roadways, waterproof surfaces, parking lots, and roof shingles.

Understanding the sustainability of the asphalt economy is important. Asphalt has a circular lifestyle, meaning it has a sustainable life process. Roughly 99% of all asphalt pavement is recovered every year, protecting people, property, and our planet. Recycling companies subject the material to a process that extracts usable asphalt from extraneous waste, then recovered materials are resold to providers for paving, shingling, waterproofing, and more. Finally, once the asphalt has reached the end of its life it’s picked up by a recycling company, and the entire process is repeated.

Asphalt Recycling benefits everyone. The asphalt recycling industry has both environmental and financial benefits. In terms of the environment, asphalt recycling prevents 2.4 metric tons of CO2e from entering the atmosphere, which is up to a 61% reduction in greenhouse gasses. It also prevents 11 tons of shingle waste from entering the landfill. The financial impacts are both country-wide and individual. Recycled asphalt saves American taxpayers more than $1.8 billion. Additionally, asphalt recycling reduces the United States’ dependence on foreign oil sources by up to 7.86 million barrels per day.

Today, the asphalt recovery market is a $7.1 billion industry. Shingle recovery has become a booming business; currently, there are more than 50 roofing recovery sites in more than 20 states. Asphalt shingles are recycled in a closed loop recycling process. Bitumen is pulled from the shingle using a specialized solvent. First, the asphalt is ground into chunks to remove nail debris, then single chinks are mixed with the special solvent to dissolve the bitumen. During this process, the solid waste sinks to the bottom of the tank while the bitumen and rest of the solvents rise to the surface. The remaining solution is heated to separate the solvents from the bitumen oil, which is then packaged.

Demands for asphalt have been increasing, and the asphalt recycling industry has modified to adapt to this new demand. Asphalt demands in the United States are projected to rise 3% year over year. Recycling programs are now available for both hot and cold mix asphalt. These sustainable programs reduce binder manufacturing costs by 35%. 95% of the asphalt and bitumen recovery allows for the resale of asphalt, asphalt granules, and bitumen oil. The asphalt economy isn’t the future; it’s already here.

It’s no secret that 2021 was a banner year for real estate sales, but a new report from ATTOM Data Solutions indicates that homeowners that were willing to sell last year reeled in a profit that hasn’t been seen in more than a decade.

ATTOM released its Year-End 2021 U.S. Home Sales Report on Jan. 27, which shows that home sellers realized a profit of $94,092 on the typical sale in 2021—up 45% from 2020 and up 71% from two years ago.

Based on median purchase and resale prices, experts said the profit increase marked the highest level in the United States since at least 2008.

Major takeaways

• National median home prices rose 16.9% in 2021 to $301,000, causing profits to surge.
• Profits margins rose in nearly 90% of the nation—150 of the 173 metro areas with sufficient data to analyze.
• Homeownership tenure dipped to a nearly 10-year low of 6.14 years.
• One of every three single-family house and condo sales in 2021 was an all-cash purchase—a six-year high.
• Institutional investing accounted for one of every 14 single-family home and condo sales in 2021 in the U.S.—an eight-year high.
• Federal Housing Administration sales hit their lowest levels in 14 years.
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What this means

Frenzied market behavior filled headlines last year as pandemic-induced stimulus and historically low mortgage rates helped fuel demand for a finite number of homes for sale.

According to the report, a surge of buyers financially unscathed by the pandemic flooded the market throughout 2021. The intense competition for a tight supply of homes contributed to a price surge that proved to be a boon for sellers who were able to reel in nearly $95,000 in profit for their homes.

“What a year 2021 was for home sellers and the housing market all around the U.S.,” said Todd Teta, chief product officer at ATTOM, in a statement. “Prices went through the roof, kicking profits and profit margins up at a pace not seen for at least a decade. All that happened as the virus pandemic raged on, which actually helped drive the increases instead of stifling them. Households that escaped job losses from the pandemic dove into the market, in large part as a response to the crisis. And the rising demand led the market boom onward.”

While 2021 was a record-setting year for price gains and profit margins, ATTOM noted that there are signs that prices could flatten out in this year as declining affordability, lower investor profits, and rising foreclosure activity contributes to a market cooldown that began in the fall.

The report stated that that was layered over with rising inflation and likely increases in mortgage rates this year.

A silver lining is that the current imbalance in demand and supply suggests there is room for at least some additional price gains.

“No doubt, there are warning signs that the surge could slow down this year,” Teta said. “But 2021 will go down as one of the greatest years for sellers and one of the toughest for buyers.”

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Another good indicator of a strong economy, was revealed in CoreLogic’s monthly Loan Performance Insights Report for November 2021.

In November, 3.6% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 2.3-percentage point decrease compared to November 2020, when it was 5.9%. This suggests mortgage performance is following the nation’s income growth.

Key findings: 

• Early-Stage Delinquencies(30 to 59 days past due): 1.2%, down from 1.4% in November 2020
• Adverse Delinquency(60 to 89 days past due): 0.3%, down from 0.6% in November 2020
• Serious Delinquency(90 days or more past due, including loans in foreclosure): 2%, down from 3.9% in November 2020 and a high of 4.3% in August 2020
• Foreclosure Inventory Rate(the share of mortgages in some stage of the foreclosure process): 0.2%, down from 0.3% in November 2020. This remains the lowest foreclosure rate recorded since 1999
• Transition Rate(the share of mortgages that transitioned from current to 30 days past due): 0.6%, down from 0.8% in November 2020

The takeaway:

In addition to low delinquency rates, foreclosure rates also remain at historic lows as borrowers have been able to quickly pile on equity during a year of record-breaking home price growth. These factors have helped offset some of the difficult economic impacts of the ongoing pandemic.

“Nonfarm employment rose 6.45 million during 2021, helping to rebuild income for families under financial stress during the pandemic,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Income growth has helped to reduce past-due rates and home equity build-up has reduced the likelihood of a distressed sale for families that experience financial challenges.”

Regional highlights:

• In November 2021, all states logged year over year declines in their overall delinquency rate. The states with the largest declines were: Nevada (down 3.8 percentage points); New Jersey (down 3.6 percentage points); Hawaii (down 3.5 percentage points); Florida (down 3.4 percentage points); and New York (down 3.2 percentage points).
• All except one U.S. metropolitan area posted at least a small annual decrease in their overall delinquency rate. The one area with an annual increase in November 2021 was Houma-Thibodaux, Louisiana (up 0.4 percentage points). Houma was impacted by Hurricane Ida in the fall, but its November delinquency rate is an improvement from October as the area works to recover.

Despite a late summer rebound, pending home sales dipped again in September, according to the newest report from the National Association of REALTORS® (NAR).

NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, declined by 2.3% last month, dropping to 116.7. 

All regions saw year-over-year contract signings fall last month, declining 8.0% nationally. The northeast decline was the most significant, with another double-digit drop in contract signings.

Lagging inventory was a primary factor in potential buyers momentarily pausing their home searches in September. Despite the lull in contract signings, experts predict that the buying activity will resume in 2022 as the supply of homes for sale improves. 

Home sales have risen by 6.4% in 2021 based on NAR’s data from the year. Looking ahead, the association expects sales activity to decline by 1.7% in 2022 under rising mortgage rates in the new year. 

Regional Breakdown:

Northeast
-3.2% MoM — Now 93.1 PHSI
-18.5% YoY 

Midwest
-3.5% MoM — 111.4 PHSI
-5.8% YoY 

South
-1.8% MoM — 139.1 PHSI
-5.8% YoY  

West
 -1.4% MoM — 105.3 PHSI
-7.2% YoY

What the Industry Is Saying:

“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity. It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.

“Rents have been mounting solidly of late, with falling rental vacancy rates. This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”— Lawrence Yun, NAR Chief Economist

“Although home sales activity has retreated from its earlier highs, it is stabilizing at a level of activity that is above pre-pandemic pace thanks to a combination of eager young buyers, lingering pandemic savings, and low mortgage rates creating opportunity despite ongoing home price gains.

“Whether the housing market will maintain this plateau and begin to grow again or slide back is dependent on home construction and income growth. Rising home prices will be the norm as long as demand exceeds supply, and with a 5.2 million cumulative home shortage over the last decade and many millennials entering prime home-buying age, the stage is set for that imbalance to continue. If builders continue to ramp up production, as they have, that could help stem price growth to a pace more consistent with rising incomes. 

“Alternatively, as rising home prices are paired with rising mortgage rates, which have already jumped above 3%, we could see mortgage payments that require larger shares of buyer paychecks, especially if incomes grow more slowly. This could cause some buyers to opt out, dampening demand and ultimately causing sales activity and home price growth to slow.” — Danielle Hale, Chief Economist at realtor.com®

For more information, please visit www.nar.realtor

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Depending on whom you ask, the past year of home price gains may have been a boon or a bust. Home prices rose by nearly 20% over the past year under a perfect storm of a widening supply and demand gap in addition to pandemic-induced influences.

On the one hand, sellers have benefited from heated competition that drove property value through the roof during the second half of 2021. On the other, surging price tags have continued to exacerbate long standing affordability issues, with more people being priced out of the market.

Housing affordability dipped in 2021 as tight inventory and high demand contributed to record-setting price surges, according to Gay Cororaton, senior economist and director of Housing and Commercial Research at the National Association of REALTORS® (NAR).

“Even before the pandemic, we had a tight supply because of lack of labor, and then when the pandemic hit, people didn’t seem too interested in listing their homes,” she says.

When the COVID-19 pandemic first appeared in March 2020, many people anticipated the housing market’s demise, says Matthew Gardner, chief economist at Seattle-based Windermere Real Estate.

“What we found was that demand not only came back, but it came back in an even more robust manner than had been seen before the pandemic hit,” Gardner says. “That was boosted even more by the work-from-home paradigm.”

The success and uncanny market behavior resulted from a series of factors, including razor-thin supply and mortgage rates, which began declining in January 2020 and ultimately landed at historically low levels—2.68%—by December of that year.

With a month left in 2021, real estate experts tell RISMedia that they expect home prices to continue climbing in 2022, albeit at a slower pace than 2021.

The days of double-digit price appreciation are gone, according to Gardner who suggests price gains to hit just above 7% in 2022.

“That is certainly not a number to be sniffed at,” Gardner says, adding that the growth will still be above the long-term average but will “come off of the sugar high that we saw this year.”

“We are going to see headwinds relative to price growth, but it’s going to be predominantly a function of two things: wages not keeping up affordability and mortgage rates rising,” Gardner warns.

In previous conversations with RISMedia, Gardner said he expected 30-year fixed mortgage rates to approach but not break 4% next year. While he maintains those predictions, he notes that it will still be up by an entire percentage point from the lows in 2021, which will squeeze more buyers out of the market.

Another factor likely to add to the cooldown in price gains is the addition of new supply. Cororaton suggests that new construction is poised to improve next year.

Despite expected improvements in new construction, Cororaton says there is still a long way to go before the industry makes a substantial dent in the market’s 5.8 million housing unit needs.

“We’re just estimating an increase of 100,000 housing starts right now, so supply will continue to remain tight as it has been since 2012,” she says.

Brokers and industry leaders say they are keeping a close eye on how many homes come on the market next year, especially as seller confidence picks up under continued progress in vaccinations.

“There are likely many that sat on the sidelines in 2021 because of the pandemic,” says Sherry Chris, president and CEO of Realogy Expansion Brands.

Chris suggests that the increase in supply and rising mortgage rates could influence the number of potential buyers. “Should this occur, we might see a decrease in multiple-bid offers, and prices might stabilize,” says Chris.

Another factor that could inject additional homes into the market is increasing foreclosure activity, says Ashley Bowers, president of HomeSmart International.

“If we start to see more foreclosures, I think it will slow down the price increase and probably shake up affordability too for people who want to do more of the fixer-uppers,” Bowers says.

The market hasn’t had to wait long to see foreclosure activity pick up since the moratorium lifted in July 2021.

While experts and brokers have been unconvinced that the market will see a deluge of foreclosed homes on the market, Bowers notes that a sizable increase could slow price gains a bit further.

“We’ve seen a little bit of an increase already, but I think it depends quite honestly on the administration and what happens with decisions that they are making as it relates to moratoriums and things like that,” she says.

Christina Pappas, VP of the Keyes Company, thinks brokers and agents looking to meet the coming market conditions head-on should prioritize their client-facing messaging regarding home-buying and affordability challenges.

“The misconception of the expensiveness of the down payment is one of those topics where we think about how we help our agents become valuable to the consumers,” Pappas says.

She adds that the value will come from agents showing deep knowledge and understanding of the programs offered in their neighborhood and what is affordable.

“The other catch when you look at affordability is that many people look at prices, and those are great headlines, but what matters is my monthly payment, and that’s the story that we need to talk about,” Pappas continues.

Despite the current trajectory of mortgage rates, they are still relatively low when compared with pre-pandemic levels. Pappas indicates that millennials and first-time homebuyers will still try to take advantage of the lower rates next year.

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Tags: Ashley BowersChristina PappasFeature

Editor’s Note: RISMedia’s Year-End Outlook series provides an in-depth analysis of the housing market’s leading indicators for economic health, and showcases expert insights on what’s to come in 2022.