(Image courtesy: Burst)

Since the start of the COVID-19 pandemic, real estate has been on a wild ride. If you’re looking to buy or sell a home, you’re likely eager to know the 2022 Market Predictions from experts and what to expect.

Last year started with the lowest interest rates on record and an anticipated economic upturn before the Delta variant of the coronavirus hit the country with a new wave of instability. And while there is no way to predict how this will play out now that Omicron could be an additional factor in how the market will fare, agents and real estate market experts do have opinions on what the market could look like next year.

2022 Market Predictions for the Real Estate Industry

Inventory

We’ve seen numbers saying that 6 million homes were sold in 2021 — and that put home sales on track to reach their highest level in almost two decades! But this surge in sales is impossible to top if more inventory isn’t introduced to the market. 

Low and limited inventory remains a concern, even though it is expected that the number of newly listed properties will increase with foreclosures and evictions getting “back to normal” in 2022 after an extended period of bank assistance and government intervention.

Still, demand remains high and homes are being purchased and taken off the market quickly, so if you are in the market to buy a property, do not delay, and make sure to get your mortgage pre-approval ready and finances in order! 

Prices

Throughout the health emergency, home prices were high, and prices are now anticipated to keep rising, albeit at a more moderate pace. Even with these elevated prices, the number of homes sold has generally been increasing, while the number of homes listed for sale isn’t keeping up the pace (see low inventory concerns above). 

Sellers should note that, compared to last year, in 2022 there is less chance of a bidding war driving up their sale price, so pricing decisions are that much more important. 

And on the other hand, it must be recognized that buyers are having the hardest time with homes at the lowest end of the market spectrum, with homes under $200,000 being the hardest to find. This has left out first-time homebuyers and many other prospective buyers because they have been priced out or become too exhausted with low inventory and losing bidding wars to continue to look for homes. Some of these potential homebuyers may be ready to enter the market in 2022.

Mortgage Rates

As mentioned, 2021 started off with some of the lowest interest rates ever recorded. By November 10, 2021, the fixed mortgage rate was only 2.98%, so while all signs point to an interest rate increase, they aren’t rising too rapidly and could remain lower than pre-pandemic levels throughout the year. Experts still are optimistic about the economy, though, so expect mortgage rates to rise, possibly up to 3.5% or as high as 4% (for 30–year rates) by the end of next year.

The market cooled a bit from its early pandemic frenzy, though it still remains very active, and asking prices have moderated somewhat, so with mortgage interest rates expected to increase, this impacts buying power. Keep in mind that it’s in your best interest to buy (or refinance) early in 2022 if you’re banking on low rates to help you save.

Other 2022 Market Predictions

Appreciation

Buyers sitting on the sidelines hoping prices would even out may continue to be disappointed in 2022. 

Home values are not expected to depreciate, though there will likely be a slowdown in appreciation. 2021 had something near 20% price growth, so a 7% or 8% appreciation in the new year is more likely.  

Location 

Remote work is still popular and available, so demand for homes in all areas remains high. But for the first time in a while, there is potential for people to feel comfortable returning to big cities.

In summary, home sales and prices are likely to stay high in 2022, while inventory will remain relatively low. We remain in a seller’s market, though some price stabilization may begin to occur and buyers may again be able to search for more affordable property options in most markets.

Only time can tell what will actually happen, but these are the high-level 2022 market predictions as we enter the new year. While obviously there is no way to know what will happen to the market, or to any specific market factor, LIST WITH ELIZABETH® feels that the market remains strong, and now is as good a time as any to buy — or sell — a property. 

Contact LIST WITH ELIZABETH® as you are considering your plans for the New Year and to learn more about regional trends and 2022 market predictions for the Springfield and Burke areas of Northern Virginia.