Whether you are a buyer or a seller, you may have heard that the market in 2021 across the country experienced what is called a sellers’ market. That was because there were not enough houses on the market to keep up with demand as many people opted to move into larger spaces, while others decided to stay put to wait out the pandemic. In fact, ??real estate agents called it the highest home value surge on record in the United States — competition was high among buyers while sellers received top-dollar for their homes.
In 2022, the market has shifted a bit and no matter where you live, these are some of the trends to watch out for.
Home prices will likely continue to increase but at a slower rate
It may be good news for buyers as what are called bidding wars — where multiple buyers try to outbid each other to land their dream home — may be cooling off a bit. According to research from The National Association of Realtors, which surveyed more than 20 top U.S. housing and economic experts, home prices will increase by 5.7%, which was less than in 2021, when S&P reported there was a 19% increase.
Contractors will be in demand
While some people are looking to move to get more space, others are finding the solution with home additions. As people spent more time than ever at home at the height of the Covid-19 pandemic, contractors saw an increased demand for projects of all kinds. That trend isn’t expected to slow down anytime soon as building supply inventory issues and delays with permitting have put projects on hold with a backlog for many contractors.
Inventory will remain tight but improve
The housing inventory issues of 2021 are expected to ease a bit in 2021. However, remote work will have an impact on suburbs and second-tier cities as remote workers have more flexibility in where they can live and work. The end of protection for struggling mortgage holders, and the end of a forbearance period could see thousands of homes go into foreclosure, which could open up the market a bit.
Mortgage Rates will keep edging up
Mortgage rates were at an all-time low in 2020 and 2021 due to market volatility, making many potential buyers ready to make the biggest purchase of their lives. In 2022, mortgage rates are on the rise and home prices are likely to increase with inflation and continued buyer demand. Some industry experts predict mortgage rates could climb as high as 4.25% by the end of the year. In fact, Freddie Mac reported the 30-year fixed-rate at 3.35% in January 2022 — how high rates will go is unclear.
Buyers and sellers would be wise to watch the market and consult with a real estate agent to see when it’s the best timing to move forward with your real estate goals. As in 2020 and 2021, the market will remain in flux as conditions like inflation have an impact on real estate.