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Homeownership Tips
The 2022 Housing Market Forecast

SUNNY WITH A CHANCE OF MORTGAGE? 2022 HOUSING MARKET FORECAST

When it comes to buying a new home, planning is key. In 2021, the housing market was highly competitive. Buyers had to act fast, sometimes making an offer the same day they saw the home just to have the slightest chance at reaching the closing process. Do you know what to expect in the new year? Before you start house hunting, get familiar with what industry experts are predicting for the housing market in 2022 so you can plan your home-buying journey.

MARKET PERFORMANCE OUTLOOK

The real estate market boomed in 2021. Can we expect more of the same in 2022? Industry insiders seem to think so, to an extent. National Association of Realtors® (NAR) Chief Economist Lawrence Yun said, “All markets are seeing strong conditions and home sales are the best they have been in 15 years.” However, Yun followed that assessment up by saying he does not expect 2022 to out-perform 2021.

Homes were purchased quicker in 2021 than in 2020, and industry leaders say that we can expect to see properties sell quickly in 2022 as well. A study by the NAR found that, in October 2021, properties stayed on the market for 18 days, compared to 21 days the year prior. That same survey discovered 82% of properties closed in October 2021 sold in less than a month. While industry professionals say we can expect buying to be less frenzied in 2022, The Mortgage Reports revealed that experts say the market will “remain hot” while inventory slowly builds back up to pre-pandemic levels over the next few years.

MORTGAGE RATE PREDICTIONS

Inflation has been going up which affects our day-to-day buying like gas and groceries. But, it also has an impact on mortgage rates, which are determined by investors who purchase bundled mortgage loans called mortgage-backed securities (MBS). When inflation is high, the dollar doesn’t stretch as far, so investors will raise mortgage rates to compensate for the lower value of a dollar.

In a Fortune article, the Mortgage Bankers Association said it expects 30-year-fixed mortgage rates to rise from the current 3% range to 4% by the end of 2022. Bear in mind, that same article said Fannie Mae predicts a 3.4% rate at the end of 2022, which is still a very low historical rate.

HOME PRICE PROJECTION

There seems to be a wide range in the year-over-year forecast for home prices. Zillow reports that it expects to see a +13.6% growth from September 2021 to September 2022, while CoreLogic predicts a mere +1.9% increase. Fannie Mae seems to have found the middle ground, expecting housing prices to rise by +7.4%. With forecasts this broad, homebuyers should consider seeking help from a mortgage professional to get a better understanding of home price increases in their area.

That said, home-buying will more than likely remain competitive. Getting materials to build a house has been difficult throughout the pandemic, however, the most recent bottlenecks have exacerbated the issue. According to an article by realtor.com, about 91% of homebuilding companies have struggled with supply chain issues.

Without materials to build to new homes, the housing inventory has depleted. When paired with a lack of existing properties on the market, there isn’t enough supply to meet the demand. Homebuyers should be prepared to move quickly when they find a home they want to make an offer on. To get ahead of their competition, buyers can get prequalified for a mortgage loan. By getting prequalified, buyers can make an offer the same day they find a home. Prequalified buyers can also experience less delays, making them the more appealing to sellers.

As it stands, 2022 is shaping up to look similar to 2021. It will be another competitive market year, with the caveat of higher mortgage rates. Buyers should prepare themselves and start their mortgage application early to stand out from the crowd. As for sellers, it’s another great year to be you. As always, PrimeLending is here to guide you through the market ups and downs, and help you make the best decisions given your financial situation. Click here to find a branch or loan officer near you.

Written By Becky Bruning