Here’s What to Expect from the 2022 Real Estate Market
The real estate market in 2020 and 2021 saw unprecedented highs and lows. With mortgage rates expecting to increase and many federal support and mortgage relief programs set to end in the new year, the market will look a bit different around the end of 2022.
Here’s what the future holds for real estate in 2022, according to Dr. Lawrence Yun, Chief Economist at the National Association of REALTORS® and industry leader, Brian Buffini, who’s renowned for his historically accurate market predictions.
Listings Will Continue to Get Multiple Offers
Looking at the real estate’s performance heading into 2022, Yun stated that the multiple-offer frenzy that took hold in the spring of 2021 had died down with homes on the market a bit longer than before—albeit they are still selling fast.
“People rushed to buy homes during the pandemic,” Yun said, pointing to a 7% increase in home sales from 2020 to 2021—from 5.7 million to 6 million, respectively. Yun predicted, however, that there will be a 2% reduction in sales this year as mortgage rates increase.
Buffini predicted that by the summer of 2022, there will be less over the top offers as first time homebuyers will be pushed to their max with increased mortgage rates and higher inflation.
More Inventory in the Spring of 2022
The housing shortage in conjunction with high buyer demand increased competition throughout 2020 and 2021, though new construction of single-family homes has been increasing, and it is predicted that there will be more inventory in the spring of 2022 as compared to last year.
Yun also indicated that more people are likely to list their homes now that federal support and mortgage forbearance programs are either ended or are slated to end this year.
Mortgage Rates Will Tick Up to Nearly 4% by the End of 2022
Mortgage rates are predicted to climb to 3.7% by the end of 2022, affecting first-time homebuyers who may have been holding on getting in on the 2020 and 2021 market as they expected for prices to fall and/or the market to crash. Increased mortgage rates can make home buying unaffordable for some.
The Summer Market Will Be Very Competitive
With core inflation just under 5%, Buffini indicated that demand for real estate would tick up as people look to hedge against higher inflation, resulting in heavy competition through the summertime.
“Those first-time buyers are eventually going to reach a cap because of inflation and a slightly increased interest rate,” Buffini said, adding that agents will likely see a mid-year slowdown in entry-level and “move-up” housing market activity.
Luxury Real Estate Will Do Well
High-End Real Estate Will Soar in 2022
High-end real estate will be the last to change, according to Buffini, who forecasted that the luxury home market will “continue to zoom all year long.”
To listen to Buffini’s full interview with Dr. Yun, head over to his podcast.
Are you thinking about buying or selling in the new year? Let us help you prepare for the changing market.