A decade-long housing shortage, historically low mortgage rates, and a pool of buyers with more work-from-home options than ever before resulted in urgent demand for real estate in 2021. With an unparalleled housing market behind us, what can possibly be in store for the year ahead? Here’s a peek at what’s projected to trend for buyers and sellers in 2022.
Prices Will Rise, But at a Slower Pace
Although last year’s home appreciation rates broke records, and continued low inventory all but ensures that home prices will keep rising, the 20% year-over-year increase that defined 2021 isn’t expected to hold. Early 2022 indicators suggest the market will experience rapid price growth initially, but the feverish pace should taper off by mid-year. Some experts are predicting an average of 7-9% growth, while others forecast more, but nearly all agree that rates will be lower compared to 2021. If you’re a new homeowner, this means that your investment is still poised for growth, but at a more even pace.
Homeowners who rent their properties will be glad to hear that 2022 rent prices are also slated to follow an upward trajectory. Similar to the housing market, rental units are hard to come by, and when demand outweighs supply, landlords can expect bigger payouts.
Mortgage Rates Will Climb
Low-interest rates are a big part of what drove the surge of buyers to the market in 2021, but marginal increases are more likely in 2022. Although it’s impossible to pinpoint how much rates will climb, some experts suggest the number will hover between 3.8%-4.2%. While climbing rates will affect how much of your mortgage payment is chipping away at the principal of your loan, they also generally bring more qualified buyers to the table (which is good news for owners looking to sell).
Demand Will Remain Strong
The trend of low-interest rates has new and seasoned buyers alike thinking about moving, especially now that more of corporate America is on board to offer flexible work options. That said, when everyone arrives to market at once, inventory becomes scarce which fosters a strong demand for real estate. Despite the desire to move, many homeowners seem hesitant to list their homes due to such little selection, putting further strain on available inventory. Solutions like new home construction will add options to the market in 2022, but until then, properties will continue to rise in value and sell fast when listed.
Clients Love Touch-less Tech
To meet the needs of the real estate market during the Covid-19 pandemic, technology stepped up to serve clients like never before. Although many tools were already available in some form, the past two years have driven even the most reluctant Americans to actually use them. From virtual open houses to digital lock-boxes to completely paperless closing documents, innovations that were fast-tracked last year to provide a touch-less, virtual experience are now around for the long run. For those in the market, this means faster MLS updates, more timely communication with your real estate team, and more options for how you, the homeowner, can do business.