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As the decade-long housing shortage collided with record-low mortgage rates, changing labor demographics, and increased chances for younger homeowners to purchase their first homes, the COVID-19 pandemic sparked a home-buying frenzy in 2021.
With record-low loan rates, the fastest yearly rise in single-family home values and rents, record-low foreclosure rates, and the largest amount of home sales in 15 years, the housing market has had an amazing year.
Will the housing market continue this trend into 2022, or will we see a crash into a buyers’ market? Although nobody can predict the future, it’s possible to identify and analyze trends and anticipate if they are likely to continue.
Are you considering selling or buying your home this year? Here’s what you should expect to see for the 2022 home-buying market.
End of 2021 Trends
After two quarters in a row of declines, the housing market experienced an incredible rebound in the final quarter of 2020. Existing home sales increased nearly 2% between October and November, a rising trend that we saw continue into the spring of 2021.
As November 2021 approached, the market cooled off slightly in the colder months, with fewer sellers listing their homes, resulting in less inventory on the market. Once school starts and the holidays are in the near future, the housing market tends to settle down, and that’s what we saw as 2021 came to a close.
2022 Housing Market Predictions
Do you already own a home? If so, you’re in a good spot leading into 2022. During the pandemic, we saw prices for homes skyrocket more than ever before. This has given current homeowners more equity in most regions of the United States.
Due to record-low interest rates, more people considered selling and buying in 2021. Unfortunately, a seller’s market like we saw last year can make it incredibly difficult for those wanting to buy a home for the first time.
We most likely won’t see this change in the upcoming year. Home prices are likely to climb at a slower pace next year than they did last year, but they are still expected to rise.
How Supply Issues Affect Real Estate
The COVID-19 pandemic has produced supply chain interruptions, which have slowed shipments and delayed new construction. These problems, combined with the growing prices of residential properties across the United States, are making the market even more aggressive.
The number of buyers wanting to purchase is rising, thanks largely to the influx of millennials entering the housing market. If you want to build a new property from scratch, it may be in your best interest to wait out the supply shortage.
For a standard single-family home, delivery delays might add one to two months to the construction period. As there aren’t enough builders on standby to put those supplies to use once they arrive, demand will continue to increase rapidly for much of 2022.
Rising Interest Rates
The Federal Reserve has declared that it will stop buying bonds and will begin raising interest rates in 2022. Higher interest rates make it increasingly difficult for people trying to buy a home. This is because higher interest rates increase monthly mortgage payments, limiting the price of homes that buyers can afford.
It’s not all bad for future buyers! Interest rates for mortgages are still impressively low. There are areas where it’s still affordable to buy a home, especially for those who work remotely. It’s been difficult for experts to predict the housing market during a pandemic that’s changed the world, including real estate transactions, so significantly.
Buying a home is still one of the most dependable ways to accumulate money, and it has long been a significant achievement for Americans seeking long-term financial stability. Even though interest rates are expected to stay relatively low, it looks like the real estate market for 2022 is going to stay in favor of the seller. Contact a real estate attorney today to learn more.