6 housing market trends to watch in 2022
The shifting housing market and economic turmoil of the past few years has left some sellers and buyers wondering about whether they should stay out of the housing market for now. But for many people on both sides of the transaction, there are opportunities to be found. The key developments to watch that may impact your business and your clients include:
Mortgage rates will stay elevated. Realtor.com’s midyear update to their housing market forecast anticipates mortgage rates to average 5% for the rest of the year and rise to 5.5% for a 30-year fixed-rate loan. While that is of course significantly higher than the mortgage rates of less than 3% borrowers were able to take advantage of in 2021 and earlier in 2022, they are still below average for mortgage rates. Double-digit mortgage rates dominated in the 1980s and 1990s and rates in the 2000s ranged from 6% to 8%.
Real estate agents can suggest strategies to overcome the challenge of higher mortgage rates such as increasing the down payment, expanding the geographical search to find a lower-priced property or looking for a property that needs work.
Inventory is anticipated to increase. Realtor.com expects inventory of existing homes to increase by 15% compared to inventory in 2021, which is good news for buyers. While most markets still favor sellers, some locations may see a more balanced market. For sellers, this means pricing their home correctly and getting it in top condition will be important to quickly attract good offers.
Buyer demand is expected to decline. Redfin real estate brokerage reported that requests for tours were down 12% during the four weeks ending June 4 compared to that same time in 2021 and Google searches for homes for sale declined by 10%. The combination of higher mortgage rates and soaring prices means some buyers are putting their home search on pause. But this may be good news for buyers – and for agents frustrated by bidding wars – because they will face less competition. More normal negotiations may be possible between buyers and sellers and contingencies such as home inspections and appraisals can again protect buyers.
Prices are anticipated to continue to rise at slower pace.
While no one anticipates home prices to drop, double-digit increases are less likely to occur. Realtor.com predicts that median sales prices will rise 6.6% in 2022 compared to 2021.
The pace of sales is expected to slow. Sellers will need to be prepared for a changing market with more competition for buyers. While homes that are priced right and are in good condition are anticipated to sell quickly, homeowners may not always receive multiple offers or may wait longer for an offer. However, Realtor.com predicts that 2022 will have the second highest level of home sales in 15 year, lagging only behind 2021.
Buyers continue to migrate to other markets. With wage growth, low unemployment and the ability of many people to work remotely, buyers continue to move away from their current location to markets with better weather, more job opportunities or greater affordability. Realtor.com found that 40.5% of home shoppers during the first quarter of 2022 looked outside their state, up from 33.4% during the first quarter of 2021.
Whether you work with buyers or sellers, keeping up with market trends can always add to your reputation as their knowledgeable trusted advisor.