Last year was an exciting albeit frustrating whirlwind for buyers and sellers alike. This new year promises to be nearly as intense, but with some key differences. Below, I’ve summarized what prospective buyers and sellers should know in 2022.
For those looking to buy:
Buyers today may be happier with prices than buyers were in 2021. It’s expected that there will be 6.6% more home sales in 2022, with overall price increases of 2.9%. A rise of 2.9% would be the lowest annual uptick since 2012 and would be significantly lower than the pace seen during 2021 when price increases reached double digits.
In addition, Redfin predicts new listings will increase above 2012 highs, making the market more balanced than it has been for much of the pandemic. With that said, this increase in listings is unlikely to solve the housing shortage as demand continues to outpace supply.
In response to continued demand, new home construction is on the rise. In fact, it’s likely to increase by 13% in 2022. With that in mind, our buyers may want to consider taking advantage of the opportunity to customize a new house to fit their needs, especially if you’re one of the many Americans still living and working in the same space.
For the first-time buyer, keep the big picture in view. They may face steep competition, but it may prove to be worth it in the long run–especially considering rent is expected to increase by 7% in 2022 alone.
Keep in mind that the mortgage rate outlook for 2022 is still somewhat murky due to the Omicron variant, Federal Reserve tapering, and other factors. As such, rates could be volatile in 2022, making it important to act when rates are low.
For those looking to sell:
2022 will still be a great time to sell, with continued growth in home sales driven in part by a wave of younger, first-time homebuyers. Additionally, though prices may not increase as much as they did in 2021, sellers will still be in an excellent financial position, as they will continue to benefit from the heavy price increases seen during the pandemic.
Buyers will likely continue to move quickly to beat out the competition. All-cash offers are on the rise, too, and made up nearly 30% of home purchases last year—and that’s likely to continue with inventory low and competition high.
The real estate market will continue to be hyper-local, meaning conditions may be very different from city to city (and even zip code to zip code). For example, prices could rise by as much as 10% in Portland, Maine, and as little as 0.2% in Honolulu, Hawaii. As such, your value as a Realtor to provide realistic and accurate pricing is key.
2021 was a year of changes and a lot of real estate market excitement, and 2022 promises to be similar.