The COVID-19 affected almost every market, from sports to industries and agriculture. Real estate was no exception.
The housing market for 2021 faced many twists and turns, alongside ups and downside loops. For example, home prices soared the highest in history, while mortgage and interest rates ran lowest.
According to experts, several homes sold higher than their listing price. The increasing home values were due to the low inventory supply and increased demand. Likewise, the rising internet rates led to a significant surge in online home buying and selling.
No one knows for sure what will happen in 2022. But experts predict a possible continuation of the seller’s market over the year.
This article compiles the top five housing market trends you need to watch out for in 2022.
1. Inventory Scarcity Will Remain a Problem
Inventory scarcity has always been a real estate problem over the years. But the COVID-19 accelerated the issue, and 2021 saw an extensive housing inventory scarcity.
First, the government restrictions to control spread, and the panic and confusion that defined the pandemic’s peak disrupted supply chains and caused significant labor shortages.
The world is gradually recovering from the pangs of the coronavirus, and builders are striving to bridge the gap in inventory. However, experts predict that housing scarcity will continue to prevail into the year, and the seller’s market will continue to reign.
Spring and summer seasons may see an upsurge in the home listings. Yet, they will hardly meet the demand for houses this year.
2. The Impacts of Interests and Inflation
The Federal Reserve announced a bit by bit rise in interest rates in 2022. So we expect a looming increase in mortgage rates and housing prices. According to experts, this news doesn’t mean doom to buyers.
The higher mortgage rates will decrease the number of buyers in the market, making it favorable to an average person. That will also create an environment of sanity across the industry.
Inflation will also create an impact in 2022. The National Association of Realtors (NAR) anticipates a median increase of 5.7% in home prices annually for 2022.
Thus, the industry is facing a possible increase in the prices of building materials and the cost of hiring skilled laborers.
Nonetheless, it’s not all gloom and doom if you’re aspiring to join the home selling and buying market. Mortgage rates are pretty low historically. Likewise, you can take advantage of the pockets of affordability available in the different regions of the USA.
3. More Delays Resulting From Congested Supply Chains
The supply chain disruptions resulting from the pandemic have found a way into the new year. The delays in the shipment of raw materials and essential building equipment will still be a pain in the real estate industry and an impediment to new constructions.
So you should prepare for a competitive housing market alongside surging prices for the existing homes across the USA. Likewise, millennials are rapidly making their debut into the home buying market, increasing the demand.
According to experts, the number of buyers entering the market is increasing, despite the continually creeping prices. Of course, builders are strong-willed, and their confidence is above average.
However, the scarcity and high cost of building materials like appliances, doors, and windows are a concern to experts.
The lack of a sustainable workforce, especially skilled constructors, is also a big challenge in the industry.
Approximately, delay in supply can drag the completion of a single-family house by four to eight weeks. And with no skilled construction workers to use the materials on arrival, the demand will outweigh supply in the industry.
4. Housing Affordability Relief
The historically low mortgage rates in 2021 played a significant role in offsetting higher listing prices. But the cost of owning a home was not a pocket change in the same year.
According to the National Association of Home Builders (NAHB), only 56.6% of homes listed in the country during the third quarter of 2021 were affordable to families living on average income.
Experts expect a breather after the high sales and prices seen in 2021. According to Lawrence Yun, the NAR’s Chief Economist, the price appreciation in real estate will slow down to 2.8% from 14.7% in 20221.
The slowdown means Americans won’t have to deal with housing prices surpassing their pay rises and fewer bidding wars for buyers. Likewise, affordability means more buyers in the market and ease of selling your home.
Experts argue that there’s no guarantee of home prices going down. Still, they say that maintaining a 20% price increase yearly is unsustainable.
5. Climate Change
Many people in the housing market rarely consider climate a possible effect in the industry. However, climatic change is one of the most dominant factors in real estate.
Experts predict that every facet of the home buying process will face challenges due to changing weather patterns.
The shifting flood zones, encroaching shorelines, and increasingly intricate insurance market are significant factors to watch out for as you check into home buying in 2022. Thus, you may want to check if the building you’re eyeing is in susceptible areas and the possible risks.
More buyers may prefer new construction buildings. These homes have proved to be more durable in the extreme climatic changes and more energy-efficient.
If you’re buying a home, remember it’s one of the most reliable ways to build wealth and establish long-term financial security. Thus, you may want to check all boxes and consider all factors.
Housing Market in 2022: Keeping Safe in the Trends
After knowing everything you need to expect in the housing market in 2022, the responsibility remains with you. You want to attain the best rates, avoid extortion, and keep all the relevant factors in check.
Experts advise on shopping around for the best rates and prices. While the cost of owning a home may be high in 2022, you don’t have to go with what stretches your budget beyond limits.
Compare prices from different listings, check all factors, and get a home that meets your needs and desires of budget and specifications.
We Buy Houses is a real estate firm in Nashville that you can trust for reliable home purchases and sales. Contact us to discuss your new home specifications, or sell yours at a reasonable price.
