2022 2H Housing Market Forecasts

Over the past few weeks, we have seen a slight shift in the real estate market. Some might even begin to think we are at a turning point in the market and that buyers will soon be the ones in charge. While that might be a little premature, there are for certain signs that the real estate market is slowing. The end of 2022 will likely be a toss-up for experts, as the first half of 2022 was all but unpredictable. 2022 2H housing market forecasts give us an insight from the experts.

Where Mortgage Rates Will Go

One of the biggest changes in the real estate market in 2022 is the sheer increase in mortgage rates, which topped out close to 6%. While rates have slowly trickled down on fears of a recession, this increase still shifted the narrative in housing. With buyers on the fence about buying with such high mortgage rates, some may be wondering if now is the time to buy. According to housing market experts, there is one thing that is certain to remain true in the rest of 2022: the record-low mortgage rate era is officially over.

Throughout 2022, rates have climbed over 2% on average. This can lead to a 30%+ increase in your monthly payment and impact affordability dramatically. Because of the Federal Reserve’s campaign against record high inflation, mortgage rate volatility is likely to stay in the second half. If inflation continues to rise on the monthly reports, fully expect to see mortgage rates respond with a move upwards. Greg McBride, chief financial analyst at Bankrate says it like this:

“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.”

For those looking to buy or sell in this market, it is important to understand how important mortgage rates will be. When we see rates rise, the impact comes in forms of affordability and ability to buy. That is why it is important to work with the right professionals and allow yourself to make the best decision possible.

The Supply Of Homes Will Increase

In 2022, and particularly in the seasonally strong spring season, the number of homes for sale has finally grown. The reason is partly due to more homeowners listing their homes, but we cannot forget what mortgage rates and record high prices has meant for buyers as well. The Federal Reserve is looking to impact the demand aspect of the supply chain, which raising rates has already dramatically decreased demand. With buyer demand moderating as mortgage rates rise, we have seen the pace of home sales decrease and the homes on market increase.

Experts continue to say that number of homes on market will grow. According to realtor.com, the housing inventory forecast for 2022 will be likely increased. With their latest release already increasing inventory forecasts from 0.3% to 15% year-to-date. This is a historical jump in inventory, coming off of a historical decrease in inventory.

Home Price Appreciation

Due to imbalances we have seen in the number of homes for sale and the number of buyers looking to purchase. The pandemic led to record breaking increases in home prices, while creating a historical deficit in supply of homes. According to CoreLogic, homes appreciated by close to 20% in 2021, and they have continue to appreciate in 2022.

Even though housing supply is on the up-and-up, there are still more buyers than sellers in this market. This will continue to increase the upward pressure on housing prices in 2022. That’s why experts are not calling on a decline of prices, but rather they are forecasting to continue a climb. On average, experts see homes appreciating by close to 9% this year, albeit we still have a few months to see.

Selma Hepp, Deputy Chief Economist at CoreLogic, explains why the housing market will see deceleration, but not depreciation, in prices:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”