2022 Housing Market Predictions

Buying a Home

2022 Housing Market Predictions

February 3, 2022

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The 2021 housing market hit milestones on many fronts, prompting home buyers to consider whether they should buy a house now or wait for more houses to become available at more reasonable rates in 2022.

Inflation has reached new highs that have not been seen since 1982. Simultaneously, the number of homes for sale has decreased, putting upward pressure on property prices.

Housing supply fell to its weakest point ever in June, with only 1.38 million properties on the marketplace, down 23% year over year. Buyers bought up properties quicker than ever before, reducing the average days on the marketplace to a new minimum of only 15 days.

Meanwhile, borrowing costs have held stable at a mortgage rate around 3.1% for a 30-year fixed-rate loan, which isn’t the cheapest on the records, but it’s close.

Will House Prices Increase In 2022?

With inflation on the rise, property prices are expected to climb in 2022. Although increasing borrowing costs and an increase in COVID-19 cases may slow the rise in prices, they will not prevent inflation indefinitely.

According to economists, most of what fueled this year’s substantial price growth would carry over into the upcoming year. These include:

  • Tight labor markets
  • High inflation
  • A loose-lending mortgage bubble
  • House production shortfall with fairly few homes available for sale
  • Shift in spending towards housing due to rise in work-from-home culture

For the first few months of 2022, prices are predicted to rise at exceptionally high rates before starting to return to relatively normal levels again.

Housing demand is expected to remain high in 2022. As per the newest Apartment Guides and Rent.com research, the average national renting price for a one-bedroom increased by 21.3% in October while the average national monthly rent for a two-bedroom increased by more than 16.7%.

There are a few predictions real estate specialists have made for 2022.

1. Inventory of Houses Will Continue To Be Scarce

Before the outbreak, the country had a scarcity of houses on sale, and Covid-19 supply chain issues along with a labor shortage have only exacerbated the situation. Despite efforts by builders to increase their output of houses being built, the stock will continue to be limited.

The number of residences active on the market hit a new low after November of 2021. As per Zillow’s report, even though there will probably be much more listings in the summer and spring of 2022, there still would not be enough to satisfy the demand.

2. Interest Rates Are Expected To Increase

In 2022, the Federal Reserve is predicted to increase interest rates several times, which means that mortgage rates will also rise. The 30-year fixed loan rate is expected to reach 3.60% by the end of the year which is up from 3.30% currently.

According to real estate experts, this isn’t necessarily negative information for home buyers. Increased mortgage rates could result in less buyers in the market since there will be little profit to be gained. In other words, a rise in mortgage rates could mean that more individuals will buy houses to live in them instead of to profit off of them.

3. Prices are not going to fall.

Home buyers or sellers hoping for less competition in 2022 will be disappointed according to analysts. Economic factors such as limited supply, high demand, and lower loan rates would likely favor sellers.

Although no one can forecast the future, the trends described above indicate that prices will continue to rise throughout the year. Zillow estimates that housing prices would increase by 11% in 2022, a little less than in 2021, but still significant.

4. Young Buyers Will Be Disadvantaged.

Skylar Olsen, an economist, has made a prediction that young home buyers (millennials in particular) will be at a disadvantage in comparison to past generations.

Houses are a lot more expensive now than in the past. Also, baby boomers are living longer and staying in their houses longer as well.

This prediction implies that young first home buyers may require financial assistance to pay for a down payment, restricting who will be able to purchase a house.

5. Buyers Must Be Well-Prepared. Consider Using A Real Estate Agent

If you plan to buy a house in 2022, there are many trends to consider and keep track of throughout the year. The COVID-19 pandemic has been a huge factor of change in the real estate market and depending on what happens with the virus, the market could change for the better or worse.

If you want expert help to find a house, then contact a Negotiator Recognized Partner. As real estate agents with years of experience in the field, a Negotiator keep their fingers on the pulse of the market and can take care of all of your needs throughout the home buying process.