HOUSING MARKET PREDICTIONS FOR 2022: INVENTORY & PRICING
The pandemic spurred one of the hottest real estate markets ever, with elevated levels of competition and prices. In fact, “between August 2020 and August 2021, home prices soared a record 19.9%,” which was a 5.8% increase from the past largest price jump, occurring right before the 2008 crash. The market’s vitality was due to a few main factors: low mortgage rates, more people working from home, changing demographics, and low supply*. However, the big question is, what will next year’s market look like?
Even as early as October 2021, there has been evidence of rebalancing in the market with a reduction in multiple offers, return of contingencies in submitted offers, and price reductions*. However, experts believe the real estate market will remain hot, albeit somewhat more subdued in comparison.
HOME INVENTORY PROJECTIONS IN 2022
In 2022, the supply of homes is projected to increase, but experts project that housing inventory will remain a problem for a while, potentially the next 2 to 3 years*. This is due to a shortage of houses on the market, supply chain disruptions, and a lack of new builds, compounding the shortage of new development in the past decade*. In fact, according to Fanny Mae analysts, there’s a four million home discrepancy, nationwide, between demand and supply*. The lack of supply is also problematic due to the new generation, millennials, entering the housing market as first-time buyers.
HOME PRICES PROJECTIONS IN 2022
If you’ve been waiting for prices to drop drastically, you won’t see that in 2022. Although according to most experts, home price gains are projected to slow “to around 5%, “*. Experts expect that the factors affecting demand, like low inventory and interest rates, will continue to plague the market; although the current high inflation rate could increase interest and mortgage rates, which would calm down the market*. Some disagree with the theory that price gains will slow, proclaiming that price gains will rise to a double-digit percentage and continue their upward trajectory.
Unfortunately, there is no magic crystal ball that we can look to for the future of the real estate market; however, by using experts’ opinions and past trends in the market, we can try and prophesize the future market trends.
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