New Year, New Market - 2022 Real Estate Market Predictions

 

It's here! 2022! We've made it to another year in this crazy and confusing time. 

If we've learned anything in these last few years and months, it's that things can change quickly. Something will shift and then suddenly everything we know is turned on its head. The real estate market has certainly seen these changes as buyers and sellers have navigated the challenges of the pandemic and its effects, and we feel pretty confident that 2022 will be no different. We rounded up some of the top experts' market predictions as we head into this new year. Check out the highlights to see what changes we may expect: 

Affordability 

It's a word you're probably going to hear a lot in 2022. According to experts, affordability will be a large determining factor that will affect the new year's market. 

According to Realtor.com's 2022 Housing Forecast, we're in for a "whirlwind" year. Existing home sales are predicted to increase 6.6%, and it seems that mortgage rates have nowhere to go but up, with predictions placing the 30-year fixed rate mortgage to be at 3.6% at the end of the year. 

Danielle Hale, chief economist at Realtor.com, told Forbes, "a gradual uptick in mortgage rates will make affordability a top consideration for home buyers, especially the 45 million Millennials...who are at prime first-time home buyer age. Demand from these young households will keep the market competitive and fast-paced." 

Rent rates are also expected to rise, which will affect affordability and motivation for home-buyers. President and CEO of the National Apartment Association Bob Pinnegar told Forbes that "while the pandemic brought an increased focus on housing affordability at the national level, affordability has been a key concern throughout the industry for years and will continue to be an area of focus in 2022. Demand for apartment and single-family homes continues to outpace supply, which ultimately drives competition and hurts housing affordability." 

The Inventory Issue

Inventory has also been a major trigger point for the market in recent years. It seems that in 2022, it may become slightly less of an issue - but just slightly. 

Realtor.com predicts that existing home for-sale inventory will increase by a meager .3%. However, a growing number of homeowners reported that they plan to sell int he next 12-months, which may cause others to continue the trend as more housing becomes available. 

The National Association of Realtors Chief Economist Lawrence Yun said that "inventory will finally increase due to more home construction, the ending of the mortgage forbearance program, and the rise in Covid-related deaths among the elderly." 

New construction is also expected to continue at a "strong pace" according to Robert Dietz, Senior Vice President and Chief Economist for the National Association of Home Builders. However, supply chain shortages and increase in lumber tariffs have caused construction costs to increase by 19% year-over-year, according to Forbes, meaning that the inventory issue is far from finished. 

Residence Requisites 

The pandemic has changed so much about our lives, particularly the way - and the where - we work. 

The suburban trends of 2020 and 2021 are expected to continue according to Realtor.com, as more homebuyers seek out space. Workplaces continue to offer flexibility in working locations, allowing homebuyers to be more flexible in where they live. 

Chief Executive Officer and President of Realogy Franchise Group Sue Yannaccone said that pandemic has created a new era of real estate. "The pandemic and lifestyle changes that followed, such as remote and hybrid work styles that have opened up the freedom to live and work from anywhere, have helped unleash new dynamics in the market," she told Forbes. "We're starting to see it in action already...2021 is shaping up to have around 6 million resale home transactions, according to the NAR." 

Hale also stated that income is expected to rise about 3%, and with workplaces continuing to offer flexibility, homebuyers will continue looking to the suburbs, and perhaps "less pricey metro areas." 

If we've learned anything in the last two years, it's that nothing can truly be certain. We hope these predictions are helpful guides, but we will truly just have to wait and see just exactly what the real estate market bring to 2022. We'll be here to experience it all with you, and we can't wait to see what's ahead.