1. Market will improve for first time home buyers
Home buyers will have a better chance to find a home in 2022, but fierce competition and affordability will continue to be a challenge. Inventory for homes is finally expected to rebound from historic lows but will still be competitive. 45 million millennials will be between ages 26 -35 which is considered prime time to be purchasing a first home. Last year, stiff competition chased away many buyers from the too crazy market, but they have been waiting for 2022 and are ready to jump back in.
2. Still a strong sellers’ market
Employment numbers are rising, continued low mortgage rates and 45 million millennials at prime buying time, and strong demand will keep prices up and homes selling quickly.
3. More homes for sale
With fewer restrictions and fears around COVID more homeowners will feel comfortable putting their homes on the market. Increased options in new construction will also increase supply.
4. Cost of construction will come down
This has already started but as problems in the supply chain are corrected, it won’t be so difficult and time consuming to obtain cabinets, lumber, and appliances. This should speed up new construction time and put more homes on the market.
5. More people will seek suburban and more remote housing options
Many companies figured out how to work remotely during the pandemic and that shift does not look like that will change even post pandemic. With homeowners not needing to live near the office, people are looking at what they really want in a home and community, and for some the promise of a quieter lifestyle, affordability, more outdoor space, and a slower pace of life is shifting their direction to a more rural setting.
6. Interest rates will increase
Rates will increase slowly, the feds agreed to keep rates very low in 2021 to help the economy recover. As inflation increases so will rates. Most analysts predict continued but slow interest rate increases but believe that rates will remain historically low, but closer to 4% by the end of the year.
7. Housing appreciation will become more stable
Homes will continue to appreciate but at a more “normal “and sustainable rate. Most predictions are an increase in the 3-7% range unlike last year increases between 15-30% depending on the area.
8. Rents will continue to increase
Rents will increase across the board. Often a mortgage payment is cheaper than rent for similar square footage. Both Minneapolis and St. Paul have passed rent control laws that are expected to be in effect sometime in 2022.
9. No Housing crash in 2022
Even though there have been COVID moratoriums in place preventing landlords from evicting tenants that have put an enormous strain on landlords, and many homeowners have missed several payments during the pandemic, the mortgage industry has learned many lessons from the recession of 2008 and have created lenient forbearance terms which allows homeowners to return to making normal monthly mortgage payments and tack on the missed payment to the backend of their loan. Due to the housing demand, home prices will continue to increase – just slower.
10. Hispanics will make up a large portion of the market
In the last couple years 1 of 10 homebuyers was Hispanic. This trend will continue.