With the new year upon us it’s time to take a closer look at some of the real estate market predictions for 2022. Below is a review of some of the expert forecasts for the year to come, and what that information might mean to home buyers.
Mortgage Rates Projected To Rise
Mortgage rates are predicted to increase as we head into 2022. However, they are still predicted to remain historically low, so there is still a massive opportunity to take advantage of this as you enter into the new year. Experts predict 2022 to be as followed:
- Fannie Mae – 3.3%
- Freddie Mac – 3.5%
- MBA – 4.0%
- NAR – 3.5%
However, compared to what we’ve seen in previous decades, these prices are still very appealing. The graph below from Keeping Current Matters depicts the average rates that we have experienced by decade.
Home Prices Expected to Appreciate
All indicators show that home prices will continue to rise through the new year due to low housing supply and high buyer demand. The experts range in their predictions on what we might see, from NAR estimating an appreciation rate of 2.8% to Fannie Mae predicting a rate of 7.4%. The average of all forecasts comes out to about 5.1%.
Inventory levels will remain limited but are expected to grow ever so slightly to 0.3% on average in 2022 according to realtor.com.
It’s important to note that while home prices are predicted to increase, rent prices are likely to follow suit. Realtor.com predicts that home prices will increase 2.9% in 2022, but rent will outpace home prices, rising 7.1%.
Home Sales Projected To Be Strong
Experts predict that home sales will continue to perform well again in the new year as more and more people move to meet their changing needs, whether that’s an office to accommodate remote work or a bigger yard to turn into an outdoor oasis or a dream home for the pup.
Additionally, in 2022 there are more than 45 million millennials in the prime first-time home buying ages of 26 to 35. Realtor.com predicts this will contribute to the demand for housing.
The sales forecast remains strong throughout the winter months. More and more people are searching for their next home now rather than waiting for the spring season to come around. Lawrence Yun, Chief Economist as the National Association of Realtors (NAR) points out:
Compared to other past winter seasons, this winter season’s sales activity will be stronger…this winter there will be more sales compared to pre-pandemic winters going back all the way to 2006.
The graph below from Keeping Current Matters depicts the 2022 sales forecast compared to what we saw in 2021:
So the real estate summary on 2022 — Interest levels are predicted to still be lower than what we have seen in previous years, and inventory is expected to grow every so slightly. However, buyer demand is still predicted to be strong and prices are expected to continue to increase. What does this mean for you? It means that now is the perfect time to ramp up your home search. Take advantage of this season where many buyers put their home search on hold and work with one of our trusted buyers agents to come up with a strategy to get you into that dream home early in the new year!