If you’re thinking of buying or selling a home next year, you’re likely wondering what’s expected to happen in the housing market. Here are a few trends that our team expects to impact the market in 2022.
Inflation and economic challenges could slightly affect interest rates. Interest rates have been at historic lows the past few years. While our current inflationary environment and other economic challenges could put upward pressure on rates, we believe they will stay relatively low throughout most of the year. At the end of 2022, we may see 30-year fixed mortgage rates rise to between 3.5% and 4%.
Inventory issues will continue to affect buyers. The lack of listings has been severe for about five years and the demand for homes has grown even more robust since the pandemic began in March 2020. Although real estate is hyper-local, demand is expected to wane somewhat in 2022, but will remain very strong when compared to a more normal market.
New construction will face supply chain, labor shortages. Despite supply chain challenges, the shortage of skilled labor and the cost of land and materials, demand for new homes will be robust in 2022.
Price appreciation will remain healthy. A rise from 7% to 12% is expected in 2022, which is a solid gain—but not the astronomical 20% rise in home values we’ve seen in some markets in the past two years.
Home sales, although still brisk, will normalize. The number of home sales should continue strong in 2022, although we may see a 2% to 3% drop in sales compared to 2021 due to a lack of housing inventory.
If you have questions about how these trends may affect you, let me know. As your local real estate expert, I’m here to help you with all your buying and selling needs.