Have you been thinking about buying or building a new home but aren’t sure what the 2022 housing market will bring?
In 2021, the housing market had an outstanding year. Homeowners and home sellers saw multiple buyers fighting for the winning bid and properties selling quickly – often well above asking prices. So, what’s the future of the 2022 housing market?
According to the National Association of Realtors, last year had the highest number of home sales in 15 years; it was the strongest yearly growth in single-family home prices, with record low-interest rates and historically low foreclosures. The 2021 housing market demand was sustained by low mortgage rates and a lack of available homes. Much of the low inventory was because the home-building and home-buying process were thrown into complete disarray by COVID-19. Building products were often unavailable or had to be back-ordered. Labor was stalled due to carpenters, plumbers, electricians, etc. either getting sick or being quarantined at home for weeks at a time.
However, despite the pandemic causing this economic uncertainty, many buyers took a more serious approach to homeownership. This approach resulted in a massive increase in the number of new homes built or existing homes purchased and/or remodeled.
For the 2022 housing market, it is predicted that inventory will continue to be low; however, price increases will also slow. As usual in southeastern Wisconsin, 2022 spring and summer will see an increase in listings, but potentially not enough to meet the market demand.
2022 Housing Market Predictions
Home sellers are in luck! Home values are expected to increase by double-digit percentage points, and 2022 will remain a sellers’ market.
However, home buyers are also in luck. Homeownership will become more accessible to a wider number of prospective buyers. A strengthening job market, low mortgage rates, and increased savings (due to people staying home and not spending money) all contribute to an increased interest in and opportunity for buying or building a new home.
According to realtor.com, a recent housing market forecast predicts home prices will continue to rise but at a much slower pace in 2022. Buyers will also become more inventive as housing and rental costs continue to consume a greater portion of their take-home pay.
More Flexibility with Work and Home
Many home buyers delayed buying a house in 2021. That was a smart move because the 2022 housing market will offer the benefit of slightly more inventory. This is due, in part, to remote work providing more flexibility to live farther away from the office. Hybrid work styles have opened up the opportunity to live and work from just about anywhere. Even better, more sellers will list their homes, and builders will have more available houses completed by mid-2022.
Many first-time homebuyers will take advantage of this flexibility to move out to the suburbs and beyond. Here, homes may sell at a lower price per square foot than in the city, have larger lots, and offer more activities that contribute to a better quality of life.
Especially in lower-density suburbs, low mortgage rates, paired with more work-from-home possibilities, have fueled a rising demand for houses. Families and couples are especially looking for detached single-family houses because they provide more living space and greater separation from nearby homes.
Growing Home Values
Looking at the current trends for the 2022 housing market, home sales will rise in 2022 due to moderated house price growth, low mortgage rates, and a stronger labor market. Implying a more competitive market, home values are growing, while inventory is trending downward in most large markets.
For example, in November 2021, the average US home was worth $316,368. This total was up by 19.3% from 2020, according to Zillow. For many years, home prices increased by the mid-single digits. The convergence of exceptional demand and chronically low supply reflect the recent double-digit price increases. The residential housing boom is being driven by the improving economy and Millennials’ approaching peak home-buying years.
Low Housing Supply
Due to Millennial homeownership, real estate speculators snapping up starter homes, and rising building product prices, the housing supply has been at its lowest level since the mid-1970s. However, the 2022 housing market demand remains robust, and applications for conventional loans and government financing have also increased.
Demand usually declines due to a slowing economy or rising interest rates. Therefore, home prices won’t crash; rather, there will be a pullback, which is normal. The home price growth in the US is predicted to slow down or “moderate” in 2022. Expect 2022 to be a healthy year for the housing market.
Compared to 2021, 2022 home sales will reach a 16-year high, mortgage rates are expected to increase somewhat but stay historically low, and price growth will drop significantly. Home prices will continue to rise but at a slower pace.
Sellers Remain at an Advantage
In 2022, sellers may currently have an advantage. Still, competitive interest rates and price stability may provide some much-needed relief to home buyers. The 2022 housing market trends show that prices are rising because of the lack of supply. However, low mortgage rates are providing opportunities for buyers to lock in low monthly payments.
In late 2021, the housing market showed signs of rebalancing, with more moderate price growth and a steady sales pace. In 2022, more homeowners are showing an interest in selling their homes, and single-family developments continue being built at a fast pace.
Homes Staying on the Market Longer in 2022
Best of all, homes are currently remaining on the market for longer periods with fewer people competing for them, which should keep prices from rising too quickly.
But, even if they get a few extra days to decide, home buyers must be prepared to act quickly. For now, the 2022 housing market remains largely a seller’s market. This is due to demand still outpacing the supply of houses. This lack of available homes is a constraint on both sellers and buyers.
Especially as the 2022 spring and summer seasons approach, expect to see some bidding wars over houses. Existing home sales will continue to grow through 2022, with more than 6.5 million closed existing home sales. That’s a 6.5% increase over 2021.
Annual Home Value Growth Will Slow
In the early months of 2022, the annual home value growth is likely to peak and plateau. By the end of the year, it is expected to slow.
The FMHPI (Freddie Mac House Pricing Index) is an indicator for typical house prices and their yearly inflation in the US. It indicated that, in 2020, home prices increased by 11.3% due to record-low mortgage rates and robust housing demand. Home value growth in 2022 will be less than half of 2021, according to their recent housing market forecast.
The Pandemic Effects
A home-buying frenzy was ignited by the COVID pandemic. This happened when a decade-long housing shortage converged with shifting workplace dynamics, historically-low mortgage rates, and new opportunities for buyers to purchase their first house. The pandemic also brought an increased focus on housing affordability. It will continue to be an area of focus in the year ahead. Demand for single-family homes continues to outpace supply, driving competition, and increasing prices.
Climate Change and Energy Efficiency
In 2022, home buyers will start considering climate change as a major factor in their home-buying decisions. Extreme weather events and natural disasters are increasing in frequency. Therefore, home sellers and custom home builders are making significant investments in climate-change resilient features and energy efficiency to appeal to home buyers.
Don’t Get Caught Up in Bidding Wars
As stated in the above article, in 2022, the competition may remain fierce, and homes will sell quickly. Even if you find the right house, you may end up in a bidding war. That’s a lot of unnecessary stress!
However, when you build a home with Jewell Homes, you’ll never be overwhelmed or exhausted from house hunting or feel stressed about getting outbid by other potential homebuyers. All you need to do is choose the perfect floor plan, purchase a plot of land, and begin the process of building your very own dream home.
Build With Jewell for Better Energy Efficiency
When you care about energy efficiency, you also care about how your home is built. Jewell Homes focuses on smart technology and can help with energy savings. They can install triple-pane windows, R-13 to R-23 rated insulation, Energy Star-rated appliances, energy-efficient HVAC, and more. A custom-built home can also offer money-saving options with water-saving landscaping, solar panels, low-flow toilets and faucets, and high-quality construction techniques.
Combine a home with lower maintenance, smart technology, energy efficiency, and upgraded finishes to get a home offering you and your family exactly what you want and need.
Enjoy the Process with Jewell Homes
Jewell Homes can design and build the exact home you’ve always dreamed of living in. Plus, the professionals at Jewell will make the experience a true pleasure. They will guide you through the entire process – from the first meeting to choosing a lot, finding the perfect floor plan, and choosing the finishes. They will answer all your questions and continue working with you until you are completely satisfied.
Hire one of southeastern Wisconsin’s top-rated custom home builders to build your dream home. That’s Jewell Homes.
Talk to the professionals and share your vision of your dream home. Get excited about the future and contact Jewell Homes today.