The past few years have been a wild ride for the real estate market, which we’ve referred to as a version of “The Hunger Games” movie in previous posts. The years 2020 and 2021 were brutal on homebuyers. Bidding wars, buying virtually, and as-is offers became the norm.
What will the housing market look like in 2022? While we don’t have a crystal ball to tell us, we can use our extensive experience to predict what we think will happen. If you’re planning to buy a home this year, get prepared for the experience now.
Happily, we predict the homebuying experience will be a little less stressful in the new year. Here are five trends we are confident we’ll see in 2022.
There Will Be More Inventory
We’ve seen an increase in the number of home listings in the last few months, and we predict this will continue to rise. Everywhere you look, there are new subdivisions being built, adding properties to the inventory. This is good news for buyers, because there will be less competition for each home, unlike the 12-buyers-for-every-house scenarios we had in 2021.
Interest Rates Will Rise
Several things going on right now point to mortgage loan interest rates ticking up in 2022. The New York Times reported in December that the Federal Reserve expects to raise interest rates three times this year to battle inflation. This will saddle homeowners with higher monthly payments for their new house. While we don’t think they will go up over a point, this is a good reason for homebuyers to get in gear and secure their mortgage loan now rather than taking a chance on paying higher rates in six, 10 or 12 months down the road.
Home Prices Will Keep Rising… but Not as Fast as They Have Been
It’s hard to believe, but we don’t think property prices are going to level off in 2022. While we expect more housing inventory to become available than in recent years, it’s still going to be low compared to the number of buyers. Multiple people interested in the same homes drive the price up. If you’ve been waiting on the much-heralded real estate bubble to burst… we think you’ll need to keep waiting through 2022.
While housing prices rose a record-setting 19.9 percent from August 2020 to August 2021, we don’t expect 2022 to see the same large jump in home prices. Rather, it will be a slight leveling off and less steep increase than in the past two years. Hopefully this means the house you want will be affordable for you when you’re ready to purchase.
Millennials Continue as the Largest Homebuying Segment
The millennial generation has jumped into homeownership with both feet. In 2020, they made up 37 percent of the homebuyers, which was the largest generational percentage in the market. We predict that millennials will continue dominating the homebuying market in 2022. They have aged into the time in their lives where their income is allowing them to pursue homeownership.
Chances Are Still High You’ll Get into a Bidding War
We’d love to tell you that you’ll be able to land the house you want without encountering other buyers, but we don’t think that’ll be the case in 2022. Yes, we think higher mortgage rates and more inventory will thin the competition to a point, but we still anticipate lots of homebuyers vying for properties. This will especially be true in the moderately priced home market. If you’re buying a house in 2022, sharpen your pencils on your offers, get pre-approved for your loan, and avoid asking the sellers for too many concessions.
Nobody knows for sure what’s going to happen to the housing market in 2022. However, by looking at trends and other goings-on in the economy, we can make some pretty accurate estimates of the path we think it will take. If you’re already looking for a house, or thinking of embarking on your homebuying journey, arm yourself with a savvy real estate agent and an experienced loan officer to assist you down your path.