What’s in Store for the 2022 Residential Housing Market? | Ezine Daddy

If ever there was a seller’s market in housing, we’re in it. The US Census Bureau says new single-family home sales in November 2021 were 12.4% higher than the revised rate for October 2021. Prospective sellers and buyers see these numbers and wonder if home prices will continue to rise, stagnate, or decline.

Why are real estate prices so high anyway?

One reason home prices are skyrocketing is that there simply aren’t enough homes to meet current demand. Housing was in short supply even before the pandemic, thanks to factors like rising material prices, zoning issues hampering construction, and rising land prices. Not to mention structural changes like the consolidation of homebuilders in the housing market as a result of the Great Recession. Then, as COVID-19 struck, labor shortages slowed the pace of construction even more. As mortgage rates fell, wealthier investors who could afford the properties for short-term investments, vacation homes, or rentals bought them and priced out the average Joe/Jane individual and family. A record 18.2% of all home purchases were investor-driven in Q3 2021, compared to 11.2% in Q3 2020.

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Thanks to the types of factors described above, home asset inflation is unusually high. But these factors have some counterweights. The Federal Reserve is slowing its purchases of bonds and mortgage-backed securities to wean the economy off the stimulus and slow the rise in domestic inflation. As a result, longer-term interest rates, such as B. mortgages to rise. While experts can’t say how much interest rates will rise, they believe the agency could hike rates several times through 2022. Mortgage rate hikes aren’t stopping sellers from listing homes, but they are making it harder for buyers to sell those homes they can afford, thereby slowing home appreciation.

Social elements continue to push home prices down. If a geographic region can offer advantages (e.g. higher-paying jobs), then demand for housing in those regions tends to increase. People can also decide whether to buy or sell based on what they desire for their family and professional life.

What lies ahead in 2022 and beyond

As economic uncertainty continues, the housing market will maintain significant unpredictability. More generally, however, experts predict the seller’s market will continue in 2022, with agencies like Zillow forecasting property values ​​to rise by double-digit percentage points. You will continue to see limited inventory and supply chain issues and bidding wars. Young buyers remain at a disadvantage compared to older generations.

But by the fall, annual price growth is likely to slow to around 3%, making for fewer speculators in the market. Therefore, people who want to own a home as a residence rather than as an investment might have an easier time finding real estate. The rise in mortgage rates will also dampen some of the demand for more expensive homes. The number of building permits has risen, suggesting supply is improving, and bidding wars are already slowing.

Real estate is seeing another trend – shifts in buying due to remote work. The pandemic accelerated the shift to remote working, meaning many prospective home buyers are free to explore buying property in regions away from where their employers are based. At the same time, the pandemic has caused many people to put off starting a family and no longer want to live in crowded cities. Demand for single-family homes in suburban or rural areas will continue to rise as people explore new job opportunities and try to make up for lost time. With the rapid adoption of technology (e.g., mortgage application tools, virtual tours), it will also be easier for buyers to find the homes they want.

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When you look at the housing market in 2022, don’t expect that finding a home at a low price will be easy. It won’t be. But what goes up must go down, and the market can and will correct. In 2022, unusually high sticker prices should ease, and with fewer investors buying properties, the odds of finding a home will be better. Prices should be back to normal by 2023.

So if you already own a property, be realistic. You can still create wealth with the property and consider it a great investment as it is forced saving. But you probably won’t see the rate of appreciation seen in recent years. If you’re looking to buy in 2022, be prepared that prices will be more affordable but will still hit you hard financially. On both sides, good research and the support of real estate professionals can help you make a wise choice. Ask questions, take your time and don’t be afraid to try new tools to get the most out of your real estate journey.

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