Housing Market Expectations for 2022

Housing Market Expectations for 2022 – First Bank

Over the last two years, it’s safe to say the housing market has been…interesting. On the one hand, we’ve seen record-low mortgage rates and an increase in housing prices across the board. On the other, low inventory has made it difficult for buyers to find a home, forcing many into bidding wars that would have been unheard of even two years before.

With all of that, many potential buyers or sellers are wondering: what will happen in 2022? We don’t have a crystal ball and can’t perfectly predict the future, but given recent trends and insights, these are a few of the things we think potential buyers and sellers can expect this year.

1. Prices will still go up, maybe just not as fast

According to most projection models, home prices will continue to go up. Although low mortgage rates are certainly helpful in bringing new buyers into the real estate market, most experts agree that the primary driver of the unprecedented boom in home prices is a supply problem. Without more new homes built or old homes put on the market, there will still be more buyers than there are homes.

This is great news for those wanting to sell in 2022 but should be a consideration for buyers. Fortunately, there are signs that some of the growth is slowing as more inventory comes into the market. This means 2022 could be the year we begin to see the housing market cool off.

2. Interest rates will probably go up

Another reason why experts think the housing market will start to cool is the potential for the Fed to raise interest rates to help curb inflation. In 2021, the average rate for a 30-year fixed-rate mortgage was 3.1%. Even a small bump, like 3.4% or 3.6%, could be the difference between purchasing or waiting for some buyers.

Although interest rates are likely to go up, that does not mean interest rates will be high. Comparatively, even an average interest rate of 4% is relatively low compared to past markets.

3. Inventory will increase, but not enough

There are several reasons inventory will likely increase this year. Homebuilders are catching up to demand. People who bought outside of the city at the beginning of the pandemic may need to move back into the urban core for work. Homeowners are feeling more confident taking advantage of a sellers’ market.

More inventory is good news for buyers, but it will most likely take longer than a year to balance the supply of homes to the demand.

If you are considering buying a home this year, we’d love to talk with you about the best options and how to get the most out of your financing!