The real estate market has never been stronger than before. Is it going to continue next year? It's hard to predict the future, especially when it comes to something as complex as the housing market. However, by analyzing current trends and making some assumptions, we can get a glimpse of what might happen in 2022. In this article, we'll take a look at inventory, buyer demand, seller trends, interest rates, and prices.
Let's hear from the following experts.
Eddie Chang, senior global real estate advisor, Realogics Sotheby’s International Realty
* Jeremy Collett, executive director of capital markets, Guaranteed Rate
* John Deely, executive vice president of operations, Coldwell Banker Bain
* Matthew Gardner, chief economist, Windermere Real Estate
* John Madrid, managing broker, Realogics Sotheby’s International Realty
* J. Lennox Scott, chairman and CEO, John L. Scott Real Estate
* Michael J. Thies, mortgage loan officer, Key Bank
* Michael Villano, national director of sales, Veterans Lending Group
Interest rates will increase.
According to Matthew Gardner, chief economist, Windermere Real Estate, rates on mortgages will most likely rise in the new year, leaving homebuyers unwilling to miss out on what are still relatively low rates, which will result in even more demand.
He also expects sales to trend higher next year but demand is still likely to outstrip supply.
The Federal Reserve is widely expected to raise rates three times in 2022, which means mortgage rates will almost certainly rise. By the end of 2022, Redfin and Realtor.com predict a 30-year fixed rate will be 3.60 percent, compared to an average of 3.30 percent now.
Home price will increase in the single digits.
Most experts agree that home prices will continue to appreciate and more balanced market.
Chang did mention the fundamental market data says we will still face a major housing shortage.
Upward pressure from increased interest rates and buyer exhaustion may temper appreciation, but market fundamentals continue to suggest that values will rise in the next year.
Homes will be less affordable
Affordable housing is a very significant problem that is only getting worse. Even if buyers focus their search in less expensive areas, many are still finding homes that are priced beyond their reach.
This is especially true for first-time purchasers. For example, very few of the current single-family houses for sale in King County are considered affordable to first-time buyers (less than 4%).
With the cost of housing has risen, millions of low- and middle-income individuals have been pushed out of metropolitan areas. As a result, there is socioeconomic inequality in our society.
More buyer demand.
As mortgage interest rates slowly increase next year, buyer demand will grow stronger as more buyers enter the market to buy a home before interest rates go higher.
In King County, the housing market is currently experiencing a shortage of approximately 300,000 units. There are very few new homes being built and only a small percentage of current for-sale inventory is expected to be available next year.
All this points to continued competitive bidding that will drive buyer demand throughout the region.
The housing market will continue to be a sellers' market in 2022. The combination of increasing interest rates and increasing buyer demand will push up prices in the single-digit percentage range.