Top 3 Real Estate Market Predictions for 2022

New opportunities in an increasingly work-from-home environment combined with historically low-interest rates and a housing inventory shortage made for an interesting and somewhat chaotic year for the housing market in 2021. 

On the heels of the pandemic, experts are looking ahead at 2022 and what the new year might hold for the market as new COVID-19 variants loom and Omicron continues to surge. Will 2022 be as hectic as last year? 

The 2022 market is forecasted to remain fast-paced and competitive

Expect a similar, if less frenzied, marketplace moving into 2022. Builders are slowly gathering their bearings as pandemic stressors start to ease, meaning new construction is on the horizon––but still a ways off. In short: don't expect the inventory to level out anytime soon. 

In the meantime, Realtor.com chief economist Danielle Hale suspects we will see another increase in home sales, and home prices will also continue rising on top of 2021 highs offset by the gradual rise in mortgage rates. Buyers will be focused on affordability above all else, particularly Millennials who are in the prime first-time homebuyer age range. 

The market is expected to remain competitive and fast-paced, although building on single-family starts will increase by at least 5%. However, rising rent costs are encouraging more people to become homeowners. Home shoppers will also gain advantages from the job market as incomes are expected to increase to keep up with inflation and work flexibility continuing with more people working from home than ever before. 

Interest rates are likely to rise

It is predicted that the Federal Reserve will raise interest rates as many as three times throughout 2022, which means mortgage rates will probably rise as a result. Redfin and Realtor.com have predicted that a 30-year-fixed-mortgage rate will reach 3.60% by the end of 2022. On the plus side, with higher mortgage rates, there will be fewer potential buyers on the market, and that might be helpful to the average homebuyer as it will help the market level out, albeit slowly. 

Prices won't drop, and rent will rise

Unfortunately, we won't see the housing market become significantly less competitive for a while. Elevated demand, low mortgage rates, and minimal supply have led to the red hot market, and bidding wars will still be expected in 2022. 

The places that will be most affected are likely to be in areas where the cost of living is low. The main reason for this is that so many people have made a mass exodus to the suburbs from the city. 

Because there is a rising demand for single-family homes, rent will keep increasing throughout 2022. Renters can expect more of what they experienced last year moving into this one. 

If you are planning to buy, make sure you are prepared

The best way to proceed at any time is to do your research and consult with local experts, so you know the best time to shop or sell. Preparing in advance will help you act fast when the right listing becomes available. Anything you can do to stay ahead in a competitive market is beneficial. Watch out for coming soon listings and new listings. Be ready to visit homes quickly and extend an offer as soon as you can.

Prices will remain high, so ensure you think carefully, talk to your realtor, and don't immediately jump onto the first house you see, lest you end up overpaying for a property and going way outside your budget. It's always a good idea to look at comparable home prices in the same area to ensure you're getting the best deal.