Wasn’t it the start of summer only a little while ago? 2021 has been a whirlwind for a number of reasons, some good and some bad. The pandemic seemed to subside for a few weeks then come roaring back, the markets experienced huge gains and the climate still doesn’t seem to be able to just magically fix itself. One thing that was a constant though this year was the record highs in the housing market. 2022 looks to be a different year though, especially for real estate agents and buyers and sellers with a few factors potentially re-balancing the market. Without further ado, here is our housing market forecast for 2022!
Interest Rates and Inflation Implications
According to The Mortgage Reports home price profits should begin to level off in 2022. But, they argue, this doesn’t necessarily mean more buying power for possible purchasers because of the potential for higher interest rates coming in.
Inflation is the key here. If it doesn’t subside from it’s current upward trend, then the Federal Reserve and markets will dictate a rise in interest rates faster than many will anticipate. This may catch homebuyers off guard who are expecting a more balanced fight in 2022.
If your home buying future is banking on the current near-record low interest rates, that may be all you need in mind to continue searching now rather than waiting or starting next year.
Some Return of Normalcy
Home price appreciation that was at a level of 19.9% between August 2020 and August 2021 (a 12-month record) won’t continue for much longer.
Already, there are warning signs that the boom is starting to lose its impetus. Fortune.com says that we’re also seeing a more traditional seasonality return, that being the cooling period that occurs like clockwork each year. This of course was absent during the holidays and winter stretch of last year because the pandemic literally had an adverse impact on everything!
And that’s not the end of it. The market is finally beginning to see push back against those incredible surging prices we are always hearing horror stories about. In October 2021 for example, 60.3% of home sales involved some form of bidding war, which was a significant decrease from the all-time high in April 2021 of 74.5%.
Don’t Forget About Rentals
Redfin.com suggests that we should not be discounting the impact of rentals in 2022. They predict that rents will rise by up to 7% before the end of 2022, which is more than double the predicted year-to-year growth in home prices of 3%.
The demand for rentals will be continue to be huge for a few key reasons. The end of mortgage forbearance will force many owners to sell up and rent places themselves. As the pandemic (hopefully) wanes, more people will return to cities where the majority of renting takes place. Additionally, a strong labor market and more good jobs forecasts will cause more people to move to new cities. With many of these new transplants wanting to rent, as opposed to committing to buying a home it will only get more chaotic. Remember, vacancy rates are already at all time lows too, so the increased demand for rentals will almost certainly push rents only further upward.
If the housing market for the coming year is one you are going to be jumping into and you feel like you will need some guidance and expertise along the way, then look no further than our team at Lantern Real Estate Group. We are a collection of premier metro Atlanta Real Estate Agents who want to help you buy your dream home or sell your current one.
Contact us today!