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Housing Market Trends 2022

Predicting the housing market is equal parts history and guesswork. While it’s possible to make accurate projections based on historical performances and current market conditions, it’s impossible to predict every possible scenario. While the housing market trends predictions we mention below are likely, especially when considering the current market, it’s impossible to predict the future of the real estate market with 100 percent accuracy.

If you’re considering buying or selling a home in 2022, here are a few things to watch:

Interest Rates Will Go Up

The housing market in 2022 doesn’t look like the market of 2021. Last year, buyers were clamoring to take advantage of historically low-interest rates, and sellers were navigating multiple offers on their homes.

In January 2021, interest rates dipped to a historic low at 2.65%. The lower rates encouraged eager buyers to purchase new homes. Lowe interest rates in 2021 were a result of the Federal Reserve’s attempts to protect the market during the Coronavirus Pandemic. The Federal Reserve reversed course and began raising interest rates again by March. The Federal Reserve increased rates by a half percentage at the beginning of May. This increase was the most significant one-time increase since 2000.

In May of 2022, the average interest rate for a 30-year fixed-rate mortgage was 5.25%.

The rising interest rates don’t appear to be slowing down, and some industry experts project that the Federal Reserve could raise rates by as much as three percentage points by the end of the year.

Buyer Demand Will Slow

The low number of homes available in 2021, paired with low-interest rates, created an intense demand for homes. In addition, workers who were given the option to work remotely suddenly had more options for relocating. This pressure generated a lot of interest.

As interest rates continue to climb, buyer demand will likely slow down. Some first-time buyers will eventually be priced out of buying because of inflation and rising interest rates. However, the slowing price increases could slow prospective investors. When fewer investors purchase homes, first-time homebuyers might have more options to choose from, further slowing rising prices.

It’s important to note that while long-term demand for homes will decrease as interest rates rise, in the immediate future, inventory could tighten as buyers try to buy a home before rates increase again.

New Construction Will Pick Up

As supply chains slowly return to normal, buyers will have more opportunities to build their own homes. When new construction increases, the number of available homes on the market will increase, contributing to slower home appreciation rates.

Housing inventory will be slow to recover

While many positive changes could increase the number of available homes on the market, don’t expect to see pre-pandemic home inventory levels for at least another year. Some industry experts project it could take at least two years before levels are back to normal.

Tips for Navigating the Real Estate Market in 2022

  • Sellers should keep an eye on the market. Watch for trends in what buyers are looking for (space for working at home, more room to spread out, etc.) and find ways to highlight those benefits in your property.

  • If you plan to sell this year, consider selling sooner rather than later to avoid selling when interest rates have increased even further.

  • Focus on making repairs vs. upgrades. Save money by spending time making repairs to the home instead of upgrading. You can still get a fair price (or even above asking) with low inventory without investing more time and money into significant updates.
  • Consider selling your home for cash: As the market slows in the back half of the year, you may consider selling your house for cash. Selling to a cash buyer, like brick, can speed up the sales process and help you avoid making expensive repairs. Selling to a company like brick means you won’t have to wait for the seller to receive approval for their financing.

Ready to sell this year? Reach out for a fast cash offer today.

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