2022 Housing Market Forecasts
As we wind down the 2021 housing market, there are many takeaways from what we went through. Whether it is a record low inventory, record high prices, or historically low rates, a lot of this information can help build 2022 forecasts. Many expert economists have already released some predictions for the 2022 forecast, while others are waiting to see how the year ends. That being said, there is much to be expected as similar to 2021 in the 2022 housing market forecasts.
2022 Rising Mortgage Rates
We have already began to see this trend, but it does not look to slow down anytime soon. The trend is rising mortgage interest rates. While mortgage rates are not a direct correlation to the FED funds rate, they usually move hand-in-hand. With the market pricing in up to 3 interest rate increases in 2022, we will see higher mortgage rates by the end of the rate increase cycle. While we will see higher mortgage rates in 2022, this does not mean they are not going to remain historically low. In fact, the average rate projection for the end of 2022 is only 3.5%. And with 3% mortgage rates not being anything to be scared about, we should still see strong buyer demand throughout 2022.
2022 Housing Market Forecasts More Sales
Home sales in 2022 are projected to continue to outperform the years before the start of the pandemic. Home sales are actually forecasted by some experts to outpace the rate of 2021. If these projections are correct, we will see an evens stronger housing market come 2022 than we saw all of 2021. Some of the increase in home sales will come from added inventory as many people will wait until the new year to list. However, the average inventory on market only looks to increase marginally. This could be detrimental to buyers who are still looking to move come the new year. In many markets, home sales have increased to record high levels in 2021. If the trend continues in 2022, first-time homebuyers may continue to struggle to find homes. Also, renters and first-generation buyers will have a hard time determining if they can purchase.
Rising Prices In 2022 Housing Market Forecasts
Finally, home prices will continue to increase in the new year. While we will see a slowdown in the pace of price acceleration, a price increase will happen. Home prices are forecasted to increase, on average, by another 5.1% in 2022. While this may not seem like an astronomical increase, you have to couple this with the double digit increases we saw in all tracked markets in 2021. With record increases throughout 2021, many buyers in the lower end of prices were already priced out. If prices continue to increase in 2022, even marginally, we will see many lower-end buyers struggle more. Typically, the lower-end of buyers holds your move-up renters, first-time buyers, and investors.
The current housing market landscape can be a daunting task if asked to navigate it alone. This is why hiring a real estate professional from the Premier Homes Team can help. Having experts in the field in your corner leads to a higher success in finding your dream home.