It's no secret that it is still very much a seller's market in the world of real estate, but things are slowly starting to shift. Across the country, more homes are coming on the market, and some agents are reporting a decline in the number of bidding wars they're seeing. So, will we finally see the market level out in 2022? Will buyers have a better chance of getting into a house without having to go over list price? Here's what the experts are predicting for the 2022 housing market.
Home Values Rising
Over the past 12 months, the average house has increased in value by 17.7% and is predicted to see another 11.7% increase in the coming 12 months. While the increase is marginally lower than what has been experienced, it's doubtful that many workers will see an 11% increase in their income. For those who are already feeling priced out of the market, it's unlikely that they'll experience any sort of relief. Zillow economist Chris Glynn has been quoted as saying, ‘Home price appreciation is difficult to forecast, but we expect home price growth to slow down from historic highs.’
While we are still very much dealing with the effects of the pandemic, many homeowners are starting to feel more comfortable about listing their homes for sale. Mortgage Reports is predicting that the market will begin to move toward a more normalized pace as existing homes for sale begin to increase. They're reporting that many investors will begin to sell off their rental homes in order to capitalize on the high home prices. However, it's unlikely that enough inventory will come on the market to provide a completely level market, and we could continue seeing the effects of the low inventory for years to come.
The good news is that those who are looking to buy or refinance will still be able to snag a low-interest rate for their home loan. Ralph DiBungara of Home Qualified believes that the national average should continue to hover around 3.25% because there is not enough sustainability to merit a large increase. By contrast, Rick Sharga of RealtyTrac is forecasting rates to rise and be somewhere between 3.5–3.75% by the end of next year. Sharga believes that rates will rise for several reasons, including continued economic growth and higher yields on the U.S.'s 10-year treasuries, which often directly influence interest rates on 30-year fixed-rate loans.
Will the Housing Market Crash?
In short, no. Don’t expect a real estate market crash similar to what occurred in 2008 anytime next year. The main reason why we will not see the market crash as we did nearly 14 years ago is that many of the forces behind that crash don't exist in this market. Home prices are being driven up due to supply and demand, not because of predatory lending. The crash of 2008 came as a response to loose credit and income guidelines and a high amount of inventory. Today, lending guidelines are much stricter, and there is a lower amount of inventory available.
Buying and Selling in 2022
The truth is, only you get to decide when the time is right for you to enter the real estate market. Not sure whether you should buy? A good next step is to contact me to learn how much your house is worth. Together, I can walk you through what houses are selling for in your neighborhood and the area you're looking to purchase, connect you with a mortgage advisor to understand how much you're qualified for, and put together a plan that helps you move forward with the next chapter of your life.