Housing Market Predictions For 2022

After a whirlwind year of booming sales and high demand, the housing market for 2022 and 2023 might be a little more stable. Investors looking for new properties and buyers looking for a residence may have a slightly easier time in the coming year. Here is our prediction for the housing market in 2022.

Slower Growth in Home Prices

Housing market predictions in 2022 show steady growth, but slower than 2021. Housing prices rose 18-19% in 2021, which is a pace that many markets would struggle to maintain for multiple years.

 

The estimates for this year’s home price increases depend on the source. Some experts believe that the 2022 market will grow much more slowly, with increases of 3-6%. Others estimate more optimistically, expecting growth of 10-15%.

New Construction Booming

The market for new construction is still in the process of rebounding from the difficulties of 2020 and 2021. Widespread closures limited access to not just an available pool of workers, but also the supply of building materials.

 

However, many of the dramatic changes to material prices leveled out by the end of 2021, providing a more stable basis for builders and investors to complete projects. Experts believe the number of housing starts will continue to grow within the constraints of the existing labor shortage.

High Demand Continues

Despite the flood of new construction starts across the country, supply remains low. Construction’s decade-long labor shortage has led to years of delays in housing, creating demand that far outpaced supply. On average, sellers in 2021 could expect to get about five offers within a month of listing.

 

As supply increases, buyers may find it a little easier in 2022 to secure a purchase contract on a home — without having to offer well above asking. With investors and cash buyers competing for the same pool of available housing, however, many markets will continue to benefit sellers more than buyers.

Mortgage Interest Rates Rise

Toward the end of 2021, experts made several mortgage market predictions. They argued that mortgage interest rates were bound to rise in order to act as a check on inflation. So far, interest rates have risen more dramatically than they expected. Specifically, rates jumped almost two percentage points in the past year.

 

Rate increases can affect supply and demand. Sellers are less likely to list their homes when rates are high, especially if they must get a mortgage at the higher rate for a new home. The changing rates also affect purchasing power for many buyers, pushing many of them out of a competitive, high-value market.

Will the Housing Market Crash in 2022?

Of all the housing predictions in 2022, people seem most interested in learning if there will be a crash similar to the housing crisis in 2008. Experts believe a crash is unlikely in 2022 or 2023.

 

Instead, they anticipate a slow cooling of the market. Rising interest rates can have a dampening effect on demand, but the increase in cash buyers makes interest rates a limited factor in controlling housing prices. In 2021, nearly one in three buyers offered cash, compared to fewer than one in four in 2020.

 

At Renovo Financial, we believe that the mortgage predictions for 2022 show a strong market waiting for the right investors. Our loan programs are designed to help you take advantage of this growing industry. Contact us to learn more or get started.