2021: A Review and Some Updates
2021 was a wild ride, and we saw some fascinating trends both nationally and locally. Let’s take a look back at some of what happened in 2021 and look ahead to 2022.
We saw significant increases in the average sales price of homes in the Denver Metro area. According to the Denver Post, there was a 21.3% increase in the price of homes in 2021 vs. 2020*. The national average saw an increase 19% according to a report from NPR. Home prices are expected to continue their climb in Colorado as inventory is at a historic low, interest rates continue to be low, and conforming loan limits have been increased. Starting January 1, 2022, the new conforming loan limits will reach up to $647,200 in most of the U.S. and $970,800 in high-cost areas.
Home prices were not the only thing that saw price increases in 2021. Inflation has steadily increased throughout 2021 as the Consumer Price Index reached 7% in December 2021. That represents the highest inflation the U.S. has seen since 1982. Rising inflation represents an erosion of your buying power.
The Build Back Better Act was in the news for much of the 4th quarter of 2021, and it looks like the Bill has stalled out in the Senate. The roughly 2 trillion-dollar spending Bill has met significant headwind as it made its way to the Senate. Included in the Build Back Better Act are proposed changes to retirement plan law that would significantly change what you can invest in, place new caps on allowable retirement savings limits, and would also eliminate the Roth conversion. As things currently sit, it does not look like the Bill will impact us in 2022 but stay tuned as this is a fluid situation.
The IRS recently released information regarding retirement plan contribution limits for 2022, and here is summary of those changes. The contribution limits for Traditional and Roth IRAs remains unchanged at $6,000 for people under 50, and $7,000 for people over 50 years old. The Simple IRA limit was increased to $14,000, and the SEP IRA limit was also increased to $61,000. Catch up contributions of $3,000 for the Simple IRA, and $6,500 for the SEP IRA also apply. 401K contribution limits were raised to $20,500, and a $6,500 catch up limit also applies. If you have any questions regarding retirement plan contribution deadlines, or contribution limits, please feel free to contact New Direction Trust Company.