Last year was pretty crazy for households looking to buy a home. Bidding wars were competitive, housing prices were high, and interest rates held near historic lows. But the housing market forecast in 2022 offers buyers a slightly better chance to find their perfect home!
In this article, we’ve compiled a list of the 4 main housing marketing predictions that experts forecast in 2022. Let’s take a look.
Forecast 1: Rise in Mortgage Rates
Mortgage rates go up and down from week to week; but, in 2022, you can anticipate more ‘up.’ According to a survey of 20 economic and housing experts conducted by the National Association for Realtors, they predicted that:
- Median home prices will rise by 5.7%
- New-home sales are forecasted to increase to 920,000 (Up from last year)
- Existing-home sales are expected to drop to 5.9 million (Down from last year)
What is pushing mortgage rates up you might ask? Well, a couple of factors.
Reasons for Higher Mortgage Rates in 2022
First off, the Federal Reserve’s tightening policy to cease the purchase of mortgage-backed securities will inevitably push mortgage rates up.
Second, the rate of short-term Federal Reserve funds is rising, which will increase mortgage rates.
Third, according to Gregory Heym, chief economist at Brown Harris Stevens, the mitigation of Federal Reserve bond purchases will lead to a rate increase mostly likely in March. These are just a few reasons why you can expect to see higher mortgage rates this year.
Forecast 2: Housing Market Predicted to Normalize
Currently, the housing market is suffering from record-low inventory levels. Builders can’t build fast enough to help the supply dilemma, so housing prices have been driven to new highs even though the number of sales has declined.
To put this into perspective, let’s compare these numbers to a year ago. We’ve found that prices are solidly higher by double-digit percentages compared to 2021.
But, here’s the good news! Lawrence Yun, the chief economist at the National Association of Realtors, forecasts the housing market to normalize in the coming months.
How Analysts Predict the Real Estate Market Will Normalize
Although mortgage rates are increasing and some buyers are getting priced out in bidding wars, home price growth will return to normalcy (which is around 5% of all of 2022).
Yun’s prediction is based on the projection of more inventory within the coming months. So, where is this supply coming from?
Great question!
Yun believes this shiny new supply will emerge from new housing construction and the conclusion of forbearance for struggling mortgage payers — a circumstance that may cause some homeowners to sell.
Forecast 3: Competitive Seller’s Market
Last year was a tough year for buyers and 2022 won’t be much different. But with Lawrence Yun’s prediction of the normalization of the housing market this year, buyers will have a slightly better chance than they did in 2021. Zillow’s forecast calls for 1% more sales than in 2021 and by the end of the year home price growth will slow to 3%
Because the demand is so high for houses but inventory levels are currently so low, sellers have an amazing opportunity to put their houses on the market and sell them for a stellar price.
In fact, Zillow’s forecast asserts 11% home value growth in 2022 and expects sales of existing homes to total 6.35 million. This means if you’ve been thinking about listing your home, now is the time!
Forecast 4: Remote Work Offers New Home Options
With the rise in the permanency of work-from-home policies, many experts believe this is a game-changer in the housing market.
How? Let’s look at the effect this new model of employment has on locational opportunities.
Locational Choices
Because more households are working remotely, many people are willing to buy a home farther away from their job locations. Many households are able to expand the search areas for their homes.
For example, home price growth will most likely rise in small towns and suburbs compared to downtown locations.
Ready to Buy or Sell a Home?
If you’re thinking about taking advantage of 2022’s superb seller’s market, you’ll need an escrow account to safely secure your money.
New Venture Escrow has a team of escrow experts, as well as innovative escrow technology to make your home selling journey simple and hassle-free. Contact us to see how our team can help you!
