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The 2022 Real Estate Prognosis: Here’s What the Market Says About Buying a Home in the New Year

Are you looking to sell or buy a home in 2022?

Competition remains fierce, supply is still low, and mortgage interest rates are likely to rise steadily but with no sign of waning demand. These are just some of the takeaways the country’s experts are suggesting for the real estate market for the new year.

Surprises may be lurking. Let’s take a closer look at the details.

The Real Estate Market in the Last Two Years 

Those in the real estate business know that 2020 and 2021 were wrought with bidding wars, low inventory, high demand, and unprecedented mortgage rates. Homebuyers and sellers had a similar experience, depending on what side of the transaction they were on. 

Data and anecdotes that showcased the fact that something extraordinary was happening in the housing market slowly made their way to the general public and news outlets.

Despite economic uncertainty, people were buying homes at unprecedented rates. For homeowners that were ready to sell, this meant they jumped into the opportunity to put their house on the market. For buyers, this meant taking a risk and going above the asking price, often engaging in bidding wars. 

Any time there is major cultural and social upheaval, the housing numbers reflect it. How people live is an astute marker of social movement, economic changes, and overall cultural trends. It’s no secret that the last two years have shaken our society to its core, which has led to the movement of people from state to state, from renting to buying, from inner cities to suburbs, from employed to unemployed, from in-office to remote work, from downsizing to upsizing, etc. 

Low Inventory Will Still Face High Demand 

According to the National Association of Realtors, the United States was low on inventory by about 5.5 million units. Homes have continued to sell quickly and there seems to be no sign of a slow down in that department. However, there are signs that inventory will not be as tight as it was in 2021. 

A healthy real estate market—or so goes the rule of thumb—suggests that there are about 6 months of unsold inventory available at any given time. In 2021, inventory across the country was about half of that—especially in hot markets such as Texas, Florida, and Georgia.

A portion of the uncertainty going into 2021 has eased and many people have decided to sell their homes, which means that inventory will rise slightly as 2022 comes around. This is according to real estate groups and experts that study the market. So as more inventory hits the market, the bidding wars will subside, but most markets will remain seller’s markets. 

The Mortgage Interest Rate Question 

One of the biggest draws for homebuyers in 2020 and 2021 were the low-interest rates they received on a home mortgage loan. Those low numbers may not continue through 2020, although experts somewhat disagree on this point because the market has been acting somewhat erratically given changing circumstances as a result of Covid and the ripple effects it causes through a community.

In the last three weeks of December, for example, mortgage rates went from 3.24% to 3.20% and back to 3.24%. According to Mortgage Reports, as of December 23, 2021, they dropped down again to 3.05%. This rollercoaster pattern seems to mirror some of the uncertainties that emerge as reports of new variants and other changes emerge. 

Despite these uncertainties, however, experts suggest that rates will continue to climb slightly through 2022 because of steadying optimism about the economy and rising inflation—both forces that can raise the rate upwards. 

Overall, consumer optimism about the future is gaining traction, despite news and uncertainties that still surround the coronavirus. 

The Impact of Inflation When Buying or Selling Your Home 

The average consumer in the United States is paying a higher price for most goods. A trip to the grocery store will reveal that everyday goods have gone up in prices—from the price of milk to purchasing a used vehicle. Reports about growing inflation have started in early 2021 and have only gotten worse as the country reached its highest number of inflation in a few decades. Data from the labor department indicates that inflation rose 6.8% since the previous year and has thus manifested in higher prices in several key sectors including housing, food, and transportation. 

So, how does rising inflation impact the housing market, and, more specifically, how does it affect your ability to buy a home?

Rising Prices of Goods

As inflation rises, people will be paying more for everyday goods including food, clothing, and other necessities. This means that there will be less monthly income available for a mortgage payment. If you’re looking to sell your home, this might mean that the buyer pool will be somewhat diminished, as rising inflation prices will deem some interested buyers as ineligible. 

Comparing Renting Rates with Costs of Buying 

And yet, despite the rising prices, interested home buyers will still consider how much buying a home compares to the renting prices. Traditionally, the value of real estate keeps up with inflation or regulates after a few years. Riding that wave and making it through the other side means you come out with a little bit of ownership, whereas renters will have lost those high rent prices to the ether. 

In that sense, inflation affects the housing market but because of the persistent value of real estate, it provides a little more security for those who can stick with it and come out the other side. And yet, independent of market fluctuations and economic forecasts, buying a home is, in the end, a highly personalized decision that may work for you at a time when people advise against it. 

That’s because the numbers pertain specifically to you, where you are in your life, economic stability, family situation, and your plan for the next few years. 

Think You Might Sell Your Home in 2022? Work With the Pros & Get Results!

Like buying, selling your home is a personal decision. There are many factors and variables at play. In real estate, there are predictions, there are forecasts and patterns, but that doesn’t mean that it’s black and white. 

What matters is working with someone that is steeped in the real estate world and can advise you on the next steps and how to do it effectively. That’s where our home-selling team comes in. 

Want to learn more? Call us here at Brian Burds Home Selling Team today.



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