The housing market has exceeded expectations so far in 2021 so everyone is asking us at Robb Realty Group, "will the 2022 housing market continue to follow the same path or are we facing a possible market downturn?" This is what the real estate experts are predicting for the remainder of 2021 and what to expect in 2022.

Housing Market Forecast

In 2021 interest rates are projected to stay low. One of the big factors why the 2021 real estate market has been booming is because of the record-low mortgage rates. Affordability soared to one of its highest levels in 30 years creating a surge in buyers who are in the market to purchase a home. The forecast continues to be good with experts predicting that mortgage rates will continue to remain low for the foreseeable future.

Although home sales have slightly started to slow down, it definitely doesn’t indicate that the market is slow. Instead, we’re returning to a more balanced market than we’ve witnessed in the past few years.

High buyer demand and low inventory in 2021 created a big surge in home values that created anxiety about the market with consumers wondering if we’re headed for another housing bubble. This year’s home price escalation was a result of simple economics – high buyer demand coupled with extremely low supply. As inventory increases, experts anticipate price appreciation will slow down.

Escalating housing prices leads to the question, “is this leading to a housing market crash by the end of 2021”. Top real estate experts clearly state that the answer is NO! The reason being that market and mortgage conditions are nothing compared to when the crash occurred in 2008. Yes, there is a small percentage of people who have faced forbearance however, the forbearance situation is balanced out by the large amount of equity buyers.

Buyers and sellers still seem to be motivated in this market and experts are saying that sentiment should continue in the coming months. Both sides of the real estate transaction stand to benefit due to interest rates remaining low – buyers can buy more and in most cases have instant equity and sellers are receiving multiple due to low inventory however, buyers are buying during this time because of low interest rates. 

What Does All of this Mean for the 2022 Housing Market

Experts project that housing inventory should improve this coming year with more people putting their homes on the market for sale. This will result in stabilizing price appreciation throughout the nation. This does not mean that home prices will depreciate it just means that industry experts are predicting a more modest appreciation of 5.82% in the next 12 months vs 11.74% average that we saw in 2021.

The Past Year Saw Mortgage Rates Reach the Lowest Rates in History

This is an important fact because if a buyer is waiting for those low rates to come back or go down further they may be waiting a long time. While homes right now may be less affordable, they’re still extremely affordable.

Interest Rates by Decade based on a 30-year mortgage by Freddie Mac:

  • 1970s: 8.86%
  • 1980s: 12.7%
  • 1990s: 8.12%
  • 2000s: 6.29%
  • 2010s: 4.09%

Experts are not predicting mortgage rates to increase by large percentages, but any increase will result in higher mortgage payments. An increase of a few decimal points could literally make or break someone’s ability to qualify for a loan or the home they want.

So, if you’re a buyer and you’re playing the waiting game, the best advice is to let you know that a rise in mortgage rates coupled with continued home price appreciation only means one thing: you will be paying more for the same house then you would if you bought it right now.

Inventory of Houses

  • Buyer fatigue is largely due to the lack of inventory. Is that going to change in 2022? Many factors lead industry experts to expect an increase in homes for sale due to the following:
  • As COVID numbers drop homeowners are more confident to put their homes on the market.
  • New home construction has increased adding new inventory

With forbearance coming to an end, we should see a wave of new inventory coming on the market. Experts do not expect these homes to be foreclosures because of the built-up equity most homeowners have, which gives them the opportunity to sell instead.

More inventory will take a bit of the edge off of today’s competitive market, however it’s important to remember that it doesn’t mean prices will fall or homes will become more affordable. There will just be more available homes for sale to choose from.

Bottom Line

There’s no way to predict the future but we can make educated projections and experts are not expecting the 2022 housing market to be as crazy as 2020 or 2021. The best way to stay on top of it is to be up on the latest industry information, stats, s,and ales in your area and to know your individual homes value. Robb Realty Group can provide all the industry information you need to know what’s going on with the housing market.