2022 Real Estate Predictions: What to Expect From the Market
When the COVID-19 outbreak took the world by storm in March 2020, there were many uncertainties. With all the chaos and unknowns, few could have predicted that the pandemic would ultimately spur one of the most competitive and tight housing markets in U.S. history. Between August 2020 and August 2021, home prices across the United States rose to a record level of 19.9%.
While these prices have been a home seller's dream, it has also made buying a home much more difficult over the past year and a half. So, what can home sellers and home buyers expect in 2022? Will the market continue to rise, stay the same, or finally see a steady decline? Read on to discover more about all the predictions for the 2022 real estate market.
What will happen to mortgage interest rates in 2022?
Most experts are predicting an increase in mortgage interest rates in 2022, partially due to the fact that we've already seen an increase in rates in the first couple months of 2022. At the end of January 2022, interest rates averaged 3.56% whereas the average was 2.77% the year previous.
However, keep in mind that even with interest rates in the 3's, that is still significantly lower than historic rates, and is expected to only dampen real estate buying activity a bit.
Will Home Prices Rise, Fall, or Stay Steady in 2022?
While there are many predictions regarding the 2022 real estate market, the general consensus is that the market will cool off, but not by much. Fannie Mae predicts that the medium home prices will see a rise of around 7.9% between the fourth quarter of 2021 and the fourth quarter of 2022. While this would mark a fall in the current price growth of the market, it would still represent a strong growth by historical standards of the real estate market. Ultimately, Fannie Mae's predictions have the housing market returning to steady levels of price appreciation.
In comparison to Fannie Mae's outlook on the 2022 real estate market, Zillow and Goldman Sachs are forecasting a much more bullish run while CoreLogic has put out a bearish prediction. Zillow has predicted home prices jumping 13.6% and Goldman Sachs even higher with a prediction of 16%. While Zillow and Goldman Sachs are seeing a world where home prices soar in 2022, the real estate data firm CoreLogic is predicting only a small 2.2% home price growth in the coming year.
Will there be more or less homes on the market in 2022?
So far here in DFW, we've seen less homes on the market in 2022 than we did this same time last year. However, experts are predicting that more homes will come on the market in the typical "spring market" helping out inventory for buyers.
Even though we predict there will be more homes for buyers to choose from, keep in mind that there will also be more buyers actively looking for homes. Many buyers who have been sitting on the sidelines may decide to participate in the spring market frenzy in an effort to take advantage of lower interest rates.
How quickly will homes sell?
Over the last year, we've seen a decrease in the average days on market for homes and anticipate that homes will continue to sell more quickly than before. We are still seeing homes selling within hours of going on the market, or even before they officially hit the market.
This means buyers need to be prepared to act fast when a home comes on the market and have a strategy in place. Working with a professional real estate agent who can help you get prequalified with a lender and who can help you structure an offer with as few contingencies, as many accommodations for the seller, and as much money as possible.
Ultimately, it looks like the 2022 real estate market will still strongly favor home sellers rather than home buyers. The supply of homes for sale is near record lows, and the gap between supply and demand is only widening. However, with the right real estate agent, finding a new home in 2022 is still certainly possible.