As we enter the first few days of the 2022 housing market, experts continue to weigh in on their expectations for the upcoming year, focusing on the three main driving factors: inventory, interest rates, and home prices. Over the past few years, we have experienced tight inventory, record low interest rates, and home prices that continue to set record increases month-over-month. For the most part, analysts expect a lot of these factors to continue throughout the year.
Inventory was scarce in 2021, as it was in previous years, and that trend is expected to continue. The pandemic has brought along supply chain issues, labor shortages, and overall uncertainty, leaving a strong demand for housing due to limited inventory. November represented a record low number of active listings on the market. However, analysts still anticipate inventory to ramp up during the typically strong spring season.
With little doubt, interest rates are expected to rise in 2022. The Federal Reserve has referenced possible three or four rate increases. A bump from record low interest rates to low interest rates is not always a bad thing, since it often weeds out buyers looking to scoop up homes as investment properties, and opens up the door for homebuyers only looking to purchase their primary homes.
Based on the previously mentioned inventory shortage, home prices will continue to surge in 2022, but not at the same pace as 2021. That being said, Zillow is still forecasting that home prices will rise 11% in 2022. As in 2021, bidding wars will continue to be expected on properly priced properties, but may tamper down a bit as the year goes on.
By: Jon Iacono