Wrapping up 2021, a year marked by soaring home prices and incredibly low inventory, you may likely have felt frustrated by the state of the ultra-hot housing market. No matter where you are in the United States, you likely have first-hand experience navigating this incredibly hot market. Whether you’ve had buyers adding enticing clauses to their offers in an attempt to nab a home or sellers cashing in, the low-inventory market has defined 2021.
As we look into 2022, you might be wondering: Will the housing market calm down? Maybe — but it’s predicted to remain a seller’s market with high prices, tight inventory, and mortgage rate rise.
So, although the market is calming down it’s still expected to be challenging for buyers, especially when purchasing first homes.
2021: A Record-Breaking Year
What made 2021 so unusual?
All signs point to remote work, low mortgage rates, a shortage of building materials, and an influx of affluent Americans buying vacation homes, to name just a few factors coming together to create a historic year for real estate. The 2021 frenzied housing market will be one for the books, but signs point to a more balanced 2022.
Rising Mortgage Rates
Sure to affect the 2022 housing market is rising mortgage rates. In 2020 and 2021, mortgage rates dropped to record-low levels in efforts to revive the economy in the wake of COVID-19. Those rates are expected to start creeping back up this year resulting in homebuying becoming even more expensive.
Home Price Growth Will Slow, Inventory Remains Low
The good news is that prices are expected to grow at a slower rate in 2022. They are not expected to drop, this isn’t a bubble, just not climb as quickly.
Price growth is expected to move toward a normal range, but on top of recent soaring prices, so prices will continue to hit new highs.
Inventory will remain low in 2022 for many reasons. A shortage of workers and materials, investors buying up single-family homes to turn into rentals, homeowners not listing current homes for fear of not finding another home.
Expect the coming year to continue to be a seller’s market with fast-moving homes and rising prices. With higher interest rates the competition should be a bit a little less intense but will still require patience, persistence, and prompt responses.
