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Housing Market

Housing Market Forecast 2022

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The COVID-19 pandemic forever changed real estate shopping and purchasing decisions in the United States. It also changed the housing market forecast for the immediate future. The demand for 3D virtual tours increased by 89 to 2,327% from February to March 2020 for single-family vs. multi-family properties, respectively.

On the flipside, new listings fell by 40% and homes for sale dropped by 17% in April 2020 compared to April 2019. Residents also departed states like New Jersey, Illinois, and New York for states like Idaho, Arizona, and Oregon. 

These and other factors led industry experts and consumers alike to wonder about the future housing market. What will inventory look like? Will home price increases slow to pre-COVID levels? Keep reading for our own housing market forecast and more.

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Housing Inventory Predictions

Housing inventory in 2022 will produce mixed results, based on inputs from varying perspectives. From one angle, experts anticipate the currently limited supply of homes will increase based on where Americans are moving from and to. Nashville, Raleigh, and Phoenix are expected to experience greater housing demand, with coastal cities and urban areas anticipating greater housing supply. 

The housing market forecast for 2022 may also include investors selling properties to take advantage of current high prices. Trends like these will generate significant short-term cash flow and free up dozens of properties to be newly listed. 

Unfortunately, homes for sale inventory is expected to remain low for the next two to three years. Real estate consumer experts share that Baby Boomers–3.2 million of whom retired in 2020–aren’t moving as frequently as they used to. This will keep the available number of homes in relative deadlock. 

Housing Price Predictions

If you were looking for the best time to sell a house (or buy one) in the US throughout 2021, you’re familiar with the meteoric rise in prices. Home sale prices rose by 18% or more between September 2020 and September 2021, which was the largest annual price gain since 1976. To put this in perspective, home values usually increase by 3.5 to 3.8% year-over-year (YoY). 

Part of this was caused by COVID-related shutdowns that led to supply chain issues and a shortage of home building materials. Another part of it was caused by fewer people moving during COVID because it’s much harder to sell when the pool of buying opportunities is temporarily restricted.

Given the smaller number of people selling their homes and the larger number of those looking to buy, our housing market forecast includes the fact that prices will remain high for a few years. Home price increases in 2022 may slowly drop to lower double digits, such as 12 or 13%. 

The availability of homes also affects pricing. The more housing becomes available, the lower prices go. This may lead to more bidding wars, but it may not, as buyers take more time now than they used to. If you haven’t done a comparative market analysis before, now is a good time to start.

Home availability will depend on how effectively home builders attract workers in 2022, as well. Fewer workers means fewer homes are built, and at a slower rate. Fewer homes on the market means demand will keep prices pretty high.

Housing Interest Rate Predictions

Interest rates are challenging to predict in a housing market forecast because so many factors influence them. Throughout most of 2020, mortgage interest rates hovered around 2.93%–some of the lowest in 30 years. We’ve witnessed rising mortgage rates again during 2021, based on inflation and Americans returning to work or gaining employment. 

In 2022, mortgage experts predict an average interest rate of 3.6%. Rates often rise in conjunction with higher yields of 10-year Treasury notes. The interest rate on Treasury notes increases the more often loans are requested, as the government must collect more money in order to loan more of it out.

Since Treasury notes offer guaranteed repayment but at lower interest rates, banks set mortgage interest rates a little bit higher. This attracts investors more often because they will get a higher return and usually in less time. Slightly higher interest rates are also useful for banks, because they can offer loans to more home buyers. 

Even with increased economic activity and more loans issued, our housing market forecast anticipates low rates ahead. Mortgage rates have been falling steadily since 1981, when they were a staggering 18.44%. Despite recessions and pandemics, US homebuyers likely won’t see interest rates higher than 3-5% any time soon.

Markets Predicted to Have Highest Demand

A housing market forecast for 2022 wouldn’t be complete without looking at which markets anticipate robust growth. Here are the top 10 US metros anticipating the highest homeownership growth:

1. Nashville, TN

Nashville, TN, has been a popular place to live for decades, and not just because it’s Music City. Homes in Nashville often feature modern aesthetics in rustic settings–a combination thousands of people find appealing. 

Tennessee also has no state income tax, offers promising career growth opportunities, and is experiencing 1.05% annual job growth. Families and individuals who want to enjoy one of the most culturally rich areas of the US will continue flocking here in droves. 

The average home price in Nashville is around $400,000, which is 6.48% higher than the national average for a home. There are about 2,752 new listings per month in the area with over 5,000 total listings in recent months. Beloved Nashville wins our top spot for the 2022 housing market forecast.

2. Raleigh, NC

This northeast region of North Carolina is booming with real estate potential. In addition to quickly-expanding job prospects in tech, healthcare, and education, homes in the area sell about 6 days faster than last year (2020). 

The Raleigh/Durham metro area population is growing by 5.9% YoY. Such growth can be attributed to an affordable standard of living, plentiful state parks, multiple museums, and beautiful natural surroundings.

Homes in Raleigh, NC, tend to sell for $370,000. This is about 1.32% cheaper than the median US home price. Raleigh experiences around 1,572 new listings each month with 3,153 total listings during a typical month. 

3. Phoenix, AZ

Phoenix is the most populated city in Arizona and we see more people moving here in our housing market forecast. While the region’s natural beauty and dozens of parks are one of its biggest attractions, the area offers plenty in the way of real estate too. 

The comparatively low cost of living, growing job prospects, and balance between outdoor and city living makes it hard to beat. Most homes in the metro area are pending sale after just 26 days on the market and command 1-2% above their list price.

The average home in Phoenix proper is selling for about $403,500, which is 7.36% above the national average home price. This area sees about 6,456 new listings each month for an average of 16,800 total monthly listings. Such a high number means investors have burgeoning opportunities, as there will be more properties to purchase at lower costs.

4. Austin, TX

The ever-interesting Austin, TX, was the number one place to live in the US for 2017, 2018, and 2019. Such an engaging city was only ousted by Boulder, CO, in 2020–which has dozens of attractions in its own right. That said, Austin is still high up on the housing market forecast for 2022.

Austin is a city teeming with as much outdoor activity as it is nightlife and indoor attractions. Several leading tech companies including Dropbox, Google, Dell, and Facebook have an office in Austin, making it great for career and economic growth.

Home sale prices in Austin currently average $550,000, which is 37.86% higher than the average US home. Such costs are driven by Austin’s ongoing popularity and above-average salaries. About 3,080 new properties are listed monthly for an average of 6,688 total listings each month. 

5. Tampa/St. Petersburg, FL

The Sunshine State has plenty to offer in the way of the immediate housing market forecast. Florida has no state income tax and often boasts roughly double the job growth rate as the national average.

Tampa in particular has some of the lowest housing prices in Florida without sacrificing quality. Combine that with the state’s ongoing emphasis on real estate development and a desirable gulf location, and you have a recipe for success.

The Tampa/St. Petersburg metro is adding about 4,308 new listings monthly for a total of 14,332 listings–rivaling that of Phoenix. The average home sells for about $335,000, which is 11.24% cheaper than the current national average.

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6. Charlotte, NC

Our housing market forecast for 2022 includes Charlotte, NC. We anticipate this area will grow through the 2020s with plenty of residential and commercial real estate opportunities. It’s the fifth fastest-growing city in the US, with more than one in four residents being Millennials. Given that Millennials are the largest percentage of homebuyers right now, this makes Charlotte ideal for real estate investors. 

This booming region is home to several energy, tech, and financial companies too, indicating ongoing economic growth. Employment grew by over 17% between 2017 and 2021, which is one driver of high demand for housing. 

The average home price in Charlotte proper is roughly $350,000, which is 6.87% cheaper than the national average. About 2,684 new listings appear monthly for a total of 6,433 listings each month. 

7. Dallas/Fort Worth, TX

The Dallas/Fort Worth, TX, area has always had a strong consumer appeal and housing market forecast. Occupational therapy, wind turbine technician, and statistician jobs are also among the fastest growing opportunities in the area.

Single family home construction grew by over 30% during 2020 in the Dallas/Fort Worth area. This was despite COVID-19-related measures, leading to the highest rates of construction in Dallas in over 10 years. 

Dallas/Fort Worth sales volume for single-family homes decreased by 5.51%, but overall new listings increased by 4.07% in 2021. Home values increased by 19.4% during 2021 and this is expected to decrease by about 5% in 2022. 

Homes in Dallas/Fort Worth are selling for $382,250 on average, which is 1.94% higher than the current US home price. Roughly 7,124 new listings appear monthly for a total of 21,939 listings monthly in the area, making it one of the largest real estate markets in the US.

8. Atlanta, GA

Great food, wonderful culture, promising economic prospects–what’s not to love about Atlanta and its housing market forecast? Georgia’s most populous city also has stronger job market growth than the United States average. Atlanta residents have been enjoying a 2.9% annual job growth rate as compared to a 1.3% growth rate averaged across US states.

The city has seen the biggest job increases in professional or technical services, educational services, and healthcare. Future job growth in Atlanta is projected to be 46.8% over the next 10 years, which is about 13.3% higher than the US’ projections for the same period. 

The average home sale price in Atlanta proper is $389,450, which is more than 11% higher than 2020’s prices. This is also 3.81% higher than the average US home price in 2021, which is $374,900. Popular homes in Atlanta sell for about 2% higher than list price and go pending in roughly 10 days. Typical homes in the area sell for about 1% less than list price and are pending sale in 24 days. 

About 14,820 new listings appear in Atlanta each month, leading to a total of 44,677 listings in an average month. On average, more than 1,300 homes are sold in Atlanta each month. These stats combined make Atlanta one of the most promising real estate markets of the near future. 

9. Seattle, WA

Seattle, WA, has long been one of the most popular cities in the US, and it’s maintained that victory without breaking a sweat. The city reported 27% more move-ins than move-outs in the first half of 2021 alone, making for a great housing market forecast in 2022.

Though The Emerald City has a reputation for being rainy all the time, that’s actually far from the case. The region’s amount of sunlight, plentiful outdoor activities, and robust career opportunities are the top reasons people continue to flock there. 

Real estate is anything but cheap in Seattle, however. The average home sale price in 2021 was $782,500–a staggering 70.43% more than the typical home in the US. This is a smidge less shocking when you factor in the area’s average salary. Many Seattle residents make between $83,000 and $100,000 per year. 

Seattle has been and will continue to be a competitive market. The average home sells for 3% above list price and goes pending in seven days, whereas popular homes sell for 6% above list price and are pending sale in five days. Roughly 4,004 new listings appear monthly for about 10,322 total listings each month. 

10. Boston, MA

From its high city walkability and diverse cultural attractions to its educational prestige, Boston is a great place to live. The region has several parks, waterfront activities, picnic areas, and walking trails, in addition to numerous transportation options. 

Boston’s YoY job growth rate of 1.9% and unemployment rate of 4% is higher and lower than the nation’s averages, respectively. This indicates ongoing economic growth, especially in sectors like biotech, software programming, and financial services. Such advantages make for an excellent housing market forecast in the region.

Average Boston homes are selling for $720,000, which is 63.03% higher than the national average. The typical home will be pending sale about 26 days after listing, with popular homes going pending in about 15 days.

Most homes sell for right around listing price whereas popular houses can sell at 2% above listing price. Roughly 4,768 new listings show up each month, totaling 8,182 home listings in Boston monthly. 

Markets Predicted to Have Lowest Demand

In order for certain states to have high inbound numbers, there must be states with high outbound numbers. There are multiple states still experiencing a population exodus from 2021 that are part of the housing market forecast for 2022. 

The 10 states experiencing the greatest population decrease are New York, Illinois, New Jersey, Louisiana, West Virginia, Nebraska, Minnesota, Indiana, California, and Iowa. From slow job growth and stagnant wages to excessive government mandates and increased crime, people have numerous reasons to look for greener pastures. 

Though there are still buyers, sellers, and those holding an open house in these states, economic activity often mirrors that of real estate activity. Individuals and families that are growing their careers or simply want to live elsewhere typically bring more money with them. As a result, developers have fresh incentive to build new housing or upgrade older regions. 

If you have the means to, consider relocating to one of the 10 aforementioned regions. You may also want to learn how to market yourself as a realtor there. Though competition is growing, the opportunities are growing as well. The more you get to know the area and understand its unique appeal, the more you’ll find the right offer for your clients.

Frequently Asked Questions About Housing Market Forecast 2022

The unpredictable conditions brought on by COVID has everyone wondering: what is the housing market forecast for 2022? The already-limited inventory of housing combined with current homeowners holding onto their properties longer has created a flurry of questions.

If you’re not sure which real estate marketing ideas will help you amid this year’s housing market forecast, you’re not alone. Take a look at the most frequently asked questions about next year and our answers: 

Will There Be A Housing Crash In 2022?

While some have speculated a housing market crash in 2022, most experts say it’s unlikely. Many chose to remain in their current residence until prices cool down a bit and more inventory becomes available. 

The price of homes in most major US markets increased anywhere from 3% to 11% or more from 2020 to 2021. While the housing market forecast still includes rising prices, experts anticipate slower price growth into 2022. The Great Resignation–which among other events, saw 4.3 million Americans quit their jobs in August 2021–drove higher salary offerings, but they have since tapered off a bit. 

This, in part, will limit home price gains. Home buyers tend to buy bigger and nicer homes when their salaries warrant it, as they can afford higher monthly payments. As buyers wait several more months in North America to continue their home search, sellers will be likely to drop prices in an effort to capture interest.

Will House Prices Go Up In 2022?

House prices may increase in 2022, but not at the pace witnessed in 2020 and 2021. Though an estimated 21% more Americans moved in 2021 than did in 2020, millions of Americans held onto their existing homes. This is one factor that led to significant cost increases, as a smaller inventory inherently means higher home sale prices.

Experts predict prices will still grow, but by single digits, rather than double digits. Popular markets like Boise, Nashville, and Phoenix will continue seeing the biggest increases whereas states like Illinois, New York, and New Jersey are still experiencing population decreases.

Is 2022 A Good Year To Buy A House?

Yes, 2022’s housing market forecast is looking to be better than that of 2020’s or 2021’s. As job numbers and economic growth slow down some, home sellers will experience pressure to decrease asking prices. Increased housing supply will also lower prices to a certain degree, shifting negotiating power back into the hands of buyers.

Of course, home buying prospects depend on location and the other economic factors present there. Regions with upward economic activity, like Texas and Utah, are likely to see growing costs but also increased quality. Areas experiencing net population losses–like Greensburg, IN, Lake Charles, LA, and San Francisco, CA–are less likely to see fresh housing developments.

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Making Headway In 2022’s Housing Market Forecast

As a realtor, you’ll face some of the same challenges realtors have always faced in 2022. Home buyers are looking for houses that have few, if any functional issues, are located in safe and vibrant neighborhoods, and are affordable. They also want homes that suit their personal preferences and are located close to family or friends, if possible. This is where it’s crucial to have relationship selling skills.

At the same time, you’ll be facing new challenges. More Americans than ever are moving out of cities into suburban centers or secondary markets, like Spencer, IA, and Breckenridge, CO. Familiarizing yourself with markets new to you will further position you as the expert for your clients. 

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