Many unexpected things will happen in the housing market in 2021; inventory depleted, property values were very high, mortgage rates at rock bottom, and eviction moratoriums added to the confusion.
However, even though the housing market was at an all-time slow in 2021, homebuyers still had difficulty purchasing houses since home buyers purchased most houses via cash. In addition, there was also a shortage in house inventory, and houses were selling for more than the original selling price. These unforeseen events make it hard to foresee what might happen in 2022.
Rising Mortgage Rates
In 2021 mortgage rates reaches an all-time low, with new 30-year fixed loans reaching less than 3% on some days. However, in 2022 things will change, as the 30-year fixed-rate loan has already increased in January.
The Federal Reserve will presumably raise interest rates by at least a quarter-point this year, implying that borrowing might become more expensive. Although some analysts believe they’ll hit a high of 3% and a low of 4%, it’s tough to tell how high. This might mean that most new buyers will still be able to borrow. However, the existing home’s refinancing options will be limited.
Housing Supply is still Scarce
Inventory challenges were one of the housing market’s main challenges in 2021. New and existing housing inventory was at an all-time low, with only a 3.5-month supply of homes for sale, meaning that the houses took that long to sell.
This trend will likely go on in 2022 since there isn’t a significant change in inventory, and also, homeowners are reluctant to list their homes since they are unsure whether there will be new homes for them to lease or purchase. In addition to the inventory issue, there’s still an ongoing supply chain problem that will likely delay the construction of new buildings.
The Rate of Increase in Home Prices Will Begin to Slow
Housing prices have soared in the last 12 months. Figures from the federal housing agency have shown that the rates had increased by 18.5% from August 2020. However, this will likely change in 2022 as the appreciation rate will probably moderate. Home appreciation rates were around 20% in mid-2021, but experts predict an increase between 7% and 7.9%. The figures are different among analysts, but one thing they can agree on is that rates will be lower in 2022. it means that properties bought may not appreciate as fast as they would have in 2021, but they are also unlikely to depreciate as much.
However, property prices will continue to rise slower, making it more straightforward for purchasers on a tighter budget to compete. In addition, home sellers can also invest in Delaware statutory trust or DSTs to utilize or hold off on the capital gains from the sale of rental property sales and invest into a real estate portfolio.
More Souse Sale Listings Result from Smoother Supply Chains
As global supply chains lagged, constructors struggled to access supplies, contributing to the highly competitive housing market. As a result, newly constructed homes delayed getting into the market, which got worse when homeowners became reluctant to list their homes for sale.
Nevertheless, in 2022 experts believe that supply chain issues will decrease, and more home listings will be available. Homeowners will also feel encouraged to list their homes if the pandemic is well-managed in 2022.
Home Online Auctions to Grow in Popularity
Competition for the limited home inventory available in the market in 2021 is likely to be the same in 2022. Consequently, auction sites will become the new home markets. Sellers will reap the full benefits of the competitive market by listing their houses for auction, which will speed up the purchasing process.
Investors will also be able to buy properties from anywhere globally, saving them the cost of traveling to a particular site to view the property. People who are most likely to lose out are frequent buyers, who would have to pay more.
Homebuyer Preferences are Changing
Most people’s expectations of what they want in a home are changing because of more flexible jobs. Because more people are working from home, they are looking for different layouts, shifting from the open-plan concept.
2022 feels a little more different compared to last year. Therefore, if you have that down payment, consider buying a home right away and start reaping the benefits.