Projection for the 2022 housing market - Could it come back down to sanity?

Projection for the 2022 housing market – Could it come back down to sanity?

The pandemic, in its various iterations (the latest being Omicron) delivered more blows to the economy, and the real estate market is no exception. Regardless, all markets have continued to adjust in its own way.

Projection for the 2022 housing market - Could it come back down to sanity?

No one knows for sure what the future has in store. But housing experts predict that in 2022, buyers can expect similar trends to what was given in the past two years; escalated prices, low inventory and quick turnaround. It is almost universally accepted that the market will cool, but not enough to see prices fall – only to rise by less. That said, although it will remain a seller’s market as home values are expected to increase by double points, it won’t be quite as wild as it was this year, says Skylar Olsen, principal economist at Tomo, a home-buying app. He assures that although finding a house may not be easy but it won’t take a toll as it did in the past year.

Here’s what to expect if you plan to buy a house in 2022.

Increase rates will increase

Both Redfin and Realtor.com predict a fixed mortgage reaching 3.60% by the end of 2022, compared to an average of 3.30% now. The Federal Reserve is expected to raise interest rates a few times, which means mortgages will most likely rise. However, there’s a “silver lining”, Olsen chimes, which could benefit the average person. That means fewer speculative buyers will be in the market as there is less money to be made.

Projection for the 2022 housing market - Could it come back down to sanity?

“When you have higher interest rates, it becomes more of people who buy homes just to live in them”, says Olsen. “That’s something the market will benefit from.”

Inventory will remain scarce

Projection for the 2022 housing market - Could it come back down to sanity?

The number of homes actively listed for sale fell to a record low at the end of November, CNBC reports. Though it is predicted that there will be more listings, however, it is unlikely there will be enough to meet demand, according to Zillow research. Furthermore adding that “the gap shrunk in 2021 and will likely shrink again in 2022; but the housing shortage will be a defining feature of the market once again next year”, read Zillows’s 2022 housing outlook

Even before the pandemic, there was low housing stock in the country, and the Covid-19 supply chain troubles and labour shortage have only made matters worse. Though builders are trying to ramp up production, inventory will remain scarce.

Prices will be high

Potential buyers can expect bidding wars on many homes, while no one can predict exactly what will happen, the trends listed above mean prices will keep climbing.

Economic trends including tight supply, elevated demand and low mortgage rates will continue to give sellers the upper hand. Those hoping competition will slow in 2022 are out of luck, according to economists from Zillow and Realtor.com.

Young buyers will be at a disadvantage

Housing affordability in the U.S. has been an issue for buyers, particularly young ones for some time. But the issue has only been exacerbated since the onset of the pandemic and will continue.

This is not only because homes are so much more expensive now than they were when baby boomers and older generations were buying their first homes, but because boomers are staying in their homes longer as they live longer. More first time homebuyers are likely to need financial help from family and friends to make a down payment, says Olsen. That will limit who can buy a house.

Projection for the 2022 housing market - Could it come back down to sanity?

Buyers should get ready and be prepared

In summary, experts advise to be prepared. Research ahead of time so you’re ready to go when you spot the right listing.

“When buying a home in the coming year or much longer, it will be important to watch new listings, and be very prepared to not only visit the home quickly but prepare to decide and extend an offer almost immediately” says Glenn Phillips, CEO and lead economic analyst for Lake Homes Realty, as he stated to CNBC Make It.

Compare home prices from the prior year in your local area to the listings you are currently considering. If the same type of house is listed for significantly more, you may wait for something else. Prices will be up, but doesn’t mean taking something outside of what’s reasonable for your budget.

The market will remain competitive, with home sales predicted to increase another 6.6% as stated by Kurt Walker, CEO of Cream City Home Buyers. Property agents report growth in tenant requirements for apartments in cities. And the population continues to be on the rise.

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