As the decade-long housing shortage converged with historically low mortgage rates, the pandemic ignited a home-buying frenzy due to shifting work dynamics and new opportunities for the young. As we near the end of 2021, the housing trends resulted in the highest sales in 15 years. But how much longer will this last? Will the housing market crash in 2022? Let’s sprawl into the current housing trends and unveil the housing market expectation in 2022.
What to expect from the housing market trends in 2022?
Already, there are signs that the housing boom is losing some steam. We are experiencing a cooling period as more homebuyers finally struggle against the surging prices. Here is a look at the housing market in 2022.
Home prices will continue to rise
One of the most widely held predictions for future housing trends is that inventory will remain scarce, but the appreciation in prices will be a bit slower than it was this year. Home sales are expected to surge another 6.6%, and simultaneously, the home prices will rise another 2.9% on top of 2021 highs. A subtle uptick in mortgage rates will make affordability a top concern for 45 million millennials aged 26-35. It will indeed be a whirlwind year for prospects, especially the first-time buyers, to get a foothold.
Interest rates and inflation
As the world moves towards the new post-pandemic normal, the lingering economic instabilities will continue to drive the unpredictable housing market trends in 2022. There is also a likelihood that Federal Reserves will hold down purchasing while increasing interest rates to tame inflation. The higher interest rates will complicate things at the buyer's end as it will further raise the average monthly payments and total lifetime cost of a mortgage. This will also add to the building cost of homes and skilled labor. Picturing the current housing trends, the National Association of the Realtors anticipates that the annual median home prices will soar by 5.7% in 2022.
What does this mean for housing market growth in 2022?
Despite the slight uptick in the inventory, builders continue to ramp up the production of family homes to meet the demand; this demand from young households will keep the housing market in 2022 competitive and fast-paced. This means that home-buyers will have better chances to secure a home in 2022, but they will grapple with fierce competition and affordability due to rising prices and increased mortgage rates.
How will the housing market in 2022 affect sales inventory?
Though the inventory is at its lowest since the 1970s, we expect to see the housing market rebound from 2021 lows. Looking at the current housing trends, the existing home sales will notch up in 2022 due to low mortgage, a strong labor market, and moderated house price growth. Moreover, the new construction will eventually feed into the housing market growth in 2022.
Will the housing market crash in 2022?
While analyzing the current housing trends, the rising rents are projected to increase by 7% in the next 12 months at the national level. Moreover, the housing inventory is at its historical lows, due to which there is intense demand for properties at the moment. We might experience declined buyer demand due to the anticipated increase in interest rates. The home price growth is forecasted to be moderate or slow in 2022; therefore, experts predict healthy housing market growth in 2022.
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