The Housing Market in 2022
The last two years disrupted every aspect of life. In the beginning days of the 2020 COVID shutdown, experts feared the worst for the economy, including the housing market. However, we quickly saw housing prices soar as inventory plummeted and interest rates reached record low levels.
As we enter year three of the pandemic, market predictions for 2022 show continued strength in the housing market. While exact predictions vary, experts do not see signs of a market crash or depreciation of prices.
Predictions for the 2022 Housing Market
Housing reports from industry experts like Zillow, Redfin, Freddie Mac, and Fannie Mae show similar trend predictions for 2022.
Decreased Housing Appreciation Rates
The rate of appreciation for home values will decrease this year. Yet, home values should not depreciate based on current predictions, meaning homes should not lose their current market value. Housing prices will continue to grow, just at a slower pace.
The different experts predict varying levels of appreciation, but most fall within 3% and 12%, both well below the record-breaking 19% appreciation seen last year. Buyers waiting for a decrease in current prices probably won’t find lower home prices in 2022.
Increased Mortgage Rates
Experts predict a rise in mortgage rates in 2022 from all-time lows. The increase in mortgage rates will help level the appreciation rates.
Rising interest rates impact the market because fewer people qualify for a mortgage, and lower interest rates reduce home prices. Homebuyers can benefit from less competition, but the purchase price they can afford goes down.
Low Inventory Levels
The supply of housing inventory remains low and should remain low throughout the year. As more millennials desire to purchase homes, the volume of new construction and existing homes on the market still don’t meet the demand.
The low inventory rates will keep housing prices high even with rising interest rates. While the competition shouldn’t be as crazy as in 2021, sellers should expect to receive multiple offers.
What This Means for Sellers
Sellers will fare well in 2022. Home values will continue to rise, just at a slower pace. With low inventory rates, it’s still a seller’s market. As the market stabilizes, sellers may find buyers asking for more repairs after an inspection. Yet, with multiple offers, sellers have the advantage.
What This Means for Buyers
Buyers are still in a tough spot. However, the out-of-control housing price increases should slow to a more reasonable pace. With increased mortgage rates, bidding wars may also become less intense. However, due to low inventory, buyers will have fewer choices and may need to compromise on their ideal home.
Do I Need A Home Inspection in 2022?
Even in a seller’s market, wise buyers schedule a home inspection. Whether or not the seller is willing to make repairs, the buyer benefits from knowing the issues in a home. Especially if buying the home extends your budget, you don’t want to end up stuck with serious home repairs.
Instead, contact Kenco Home Inspections to schedule an inspection in Southeast Florida. We’re here to support you in the home buying process in 2022.