2021 was one of the craziest years that we've ever seen in the real estate market! With interest rates at near historic lows and inventory extremely scarce, home prices skyrocketed by an average of $50,000 in the past year alone. We saw the biggest boom in home prices and volume in the Spring and Summer of the year with a gradual decrease towards the end of the year. So, are we finally going to see the market cool off a bit in 2022 or are we just seeing a short pause during the holiday season?
Home prices are in fact expected to keep rising in 2022, however interest rates are likely going to increase in the new year as well. Because of the high prices and rising interest rates, many experts in the field believe that the rate of home price growth will significantly slow down as the year goes on (to around 3-5%). Although the price growth isn't projected to be as high as it was in 2021, we are still likely going to continue to see more record high prices in 2022. Millennials aged 26-35 are projected to be one of the major driving factors in keeping the demand high due to the rising cost of rent making them more eager to obtain homeownership in the new year (some experts believe rent will continue to rise another 7% this year). The rate of inflation is projected to slow down significantly in 2022 as well. Currently we are sitting right around 7% but that number is projected to fall down somewhere closer to the 2-4% range as the year goes on which should also help settle the market down a little bit compared to 2021.
However the pandemic has caused a certain shift in the real estate market in terms of more people now working remotely from home. We are likely going to keep seeing this transition to more remote work in 2022 especially with the new COVID variants emerging and the numbers climbing again. As more people work remotely, the more the demand for homes that suit this new way of living will arise. This new way of living could also result in suburbs becoming more competitive and in higher demand than they already are.
What all of this means for buyers:
Although interest rates are expected to go up, they aren't expected to explode like we’ve seen in years past. This could mean that certain families and individuals that are right on the cusp of homeownership might decide they have to wait longer to be able to afford a home, but it shouldn’t have too big of an impact on the market as a whole. This also means that if you are a buyer then right now is an ideal time to buy especially if interest rates and prices are both expected to increase as the year goes on.
What all of this means for sellers:
Home prices are still high and there are many buyers out there who have been in the market for a new home for months now. This could mean they are worn out and if they see a property that pops up, they will be more willing to jump on it immediately with a high offer to snatch it off the market quickly. However even if you are not ready to sell at this very moment, waiting to sell until later this year still appears to be a great option. Home prices are projected to continue rising and demand isn’t going anywhere so no matter when you decide you’re ready to sell, you should still be able to get top dollar for your home!
If you are interested in buying or selling or whether you just have a simple question, feel free to reach out to me via call/text/email. I would love to help you and your family in any way possible!