The real estate crystal ball suggests 2022 will allow us all to draw breath after last year’s exuberant market that powered home values to record levels.
Covid might still be part of our lives, but the next 12 months will be more stable for those jumping into the real estate market.
Data suggests that owners will not only enjoy the consolidated gains created in 2021 but see moderate value growth continue.
A more conservative housing market will give first-time buyers and upgraders a better chance to purchase the home they deserve. And if you want to downsize and partially cash out to finance your retirement, this is great news too.
With interest rates likely to increase to control inflation, the market is expected to be busy in the months before the Federal Reserve steps in. Bankrate.com predicted the 30-year fixed mortgage rate will peak at 3.75%…and we’ve already seen rates cross that threshold.
But always remember, America is not one big property market but tens of thousands of micro-markets where the fortunes of even adjacent neighborhoods can vary. So it always pays to spend time researching sales results, buyer behaviors, and price trends in your target areas. Focus on the style of property you wish to purchase or sell.
Below are some of the big picture movements we’re likely to see for 2022.
Values to Rise
Of the many optimistic outlooks, Zillow believes we’ll see national prices rise 11%. While that’s lower than the 19.5% leap we witnessed last year, sales of existing homes will increase to 6.35m from 6.12m. The National Association of Realtors (NAR) is more conservative, forecasting a 5.7% increase based on its survey of 20 economists.
More New Money
A hike of 9% in new finance is predicted by the Mortgage Bankers Association. However, refinancing could drop to $860m from $2.26bn (-62%) as owners consolidate. That would result in the value of total newly-issued mortgages dipping by a third.
Longer to Sell
Redfin predicts a slowdown in the speed at which properties will sell. In the middle of last year, homes were snapped up in an average of 15 days. Those heady days of buyer FOMO (fear of missing out) are unlikely to be repeated in 2022.
There’s no shortage of folks predicting higher interest rates. If and when this hits, affordability will become a greater challenge, especially for first-time buyers. At the moment however, it’s pulling together the deposit that is the real challenge for most.
There’ll be more homes on the market, giving buyers a better selection but not necessarily a significant negotiation advantage. The additional stock will come predominantly from new homes. Folks unable to make payments after mortgage vacations will add to the stock. The National Association of Realtors expects more new homes to be purchased than in 2021.
With additional housing stock coming onto the market, owners need to be realistic about their pricing or risk losing potential buyers. Always make sure your home is presented well to optimize its price.