2022 Real Estate Predictions
We are experiencing historic times and are in a real estate market that is "ANYTING BUT NORMAL"! We have been watching the market and looking to experts for trends that may give some insight as to what we may expect in 2022. In this market update we have assembled current trends including what economist and experts are forecasting. We hope this information will be educational and help you in your real estate decisions going forward.
What to expect this winter?
Typically, in a normal market most homes come on the market in the spring (April, May, June). But we are not in a normal market. The expectation going into the winter is that pent-up-demand, delayed plans caused by the pandemic has homeowners looking to move on to the next chapter of life. A recent survey by Realtor.com suggests that many prospective sellers are actively preparing to enter the market this winter.
What impact will rising interest Rates have on the real estate market in 2022?
We know that mortgage rates can have an impact on home value appreciation. As shown in the graph below we can see that despite fluctuations in mortgage rates home values continued to appreciate. We can also see in the second graph that interest rates had no impact on the volume of homes sold. Going into 2022 we are likely to see a rising interest rate environment. I do not expect this to impact the housing market, but we can expect it to cost more to buy a home in the coming months and into 2022.
Mortgage rate projections
On average it is predicted that interest rates could rise anywhere from 3.3 to 4%. With the potential of rising interest rates and predicted home value appreciation we can expect it to cost more to purchase a home in 2022. But by historical standards and based on projections mortgage rates are expected to remain historically low which is good news for buyers and sellers.
What will happen to Home Values in 2022?
As we head into 2022 rising housing inventory will have a direct impact on supply and demand. In 2021 we saw home values appreciate at historic highs across the country. For example, in Albuquerque, NM we saw an average home appreciation of 15% and appreciation was as high as 20% in Rio Rancho, NM. In 2022 home appreciation across the United States is expected to rise from 2.8% to 7.4% with an average rate of appreciation of 5.1%.
In 2022 Economist predict that home values will continue to rise at a slower pace as compared to 2021. This is directly impacted as we see housing supply increase in 2022. With over 6.5 million homes sold across the United States in 2021, home sales are predicted to increase and perform well again in 2022
The Million Dollar Questions?
Is now a good time to Sell?
At the risk of sounding like a broken record I am going to say it again! "There literally has never been a better time to sell."
We are currently in a robust sellers’ market. The Graphic below illustrates where we are at in today's real estate market and underscores just how great the market is for selling.
Is now a good time to Buy?
With historic low interest rates housing affordability remains low. Owning a home can lead to many advantages such as wealth building, financial freedom in retirement, tax advantages and pride of ownership. The graph below shows what is at stake by not purchasing a home and the potential growth of a $350,000 home purchase through 2026. Although appreciation cannot be guaranteed, it is likely that a smart home purchase could lead to added value in the years to come.