The real estate market in 2021 was one for the record books. Home prices soared by 32.6% over the previous year.
The key drivers of this hot market were low inventory, high demand, and low interest rates. That led to multiple offers for homes in just a few days, rather than weeks.
Bidding wars ensued, driving up home values even more.
You know that what goes up must come down at some point. Is this a major housing bubble? If it is, will it burst in 2022?
What does the real estate market outlook hold for the next year? Find out the answers to these questions and more as we tackle the top real estate predictions for 2022.
1. Rise in Interest Rates
Record-low interest rates play a role in the real estate market. Buyers want to take advantage of these rates to lower their mortgage payments.
The Federal Reserve said that interest rates will increase, it’s just a matter of when. Some reports suggest that they can go up in the second half of 2022.
2. Wave of Foreclosures
There was a federal moratorium on foreclosures during the height of the pandemic. The federal moratorium ended on July 31st.
Most states enacted their own moratoriums, which have also ended. People who were behind on their mortgage payments either have to pay up or face foreclosure.
Foreclosures increased in the second half of 2021, and they will continue into 2022. The potential silver lining is that the foreclosures increase real estate inventory.
3. Home Prices Increase
Will home prices ever come down? That seems to be the million-dollar question for buyers and sellers. Home prices will increase over the next year.
Don’t be too alarmed, they won’t jump as high as last year. Expect moderate increases of 5% to 10% in most real estate markets.
4. Increase in Non-Traditional Sales
The traditional way to sell real estate is to prepare the home for sale, list it, and accept an offer. This can take months to do.
More people will do what they can to avoid foreclosure, so they’ll try non-traditional ways to sell their homes. Selling FSBO or a fast sale are among the top ways.
Real estate agencies are starting to offer several ways to help sellers. Chadschwendeman.com is one example of such a company.
5. Renting Trends Will Continue
What happens when housing prices become unattainable for the average worker? They end up renting.
Many people chose to rent to wait out the competitive housing market and for home prices to stabilize. The rental market will continue to increase in 2022.
Rental prices will increase because of higher rental demand. It will take as much time to find a rental as it does to find a home to purchase in a competitive market.
The Real Estate Market Outlook for 2022
Which real estate market trends will stick around in 2022? Here’s the real estate market outlook: higher rental demand, price increases, and more foreclosures are on the horizon.
Buyer demand will remain steady even as interest rates go up. Hopefully, inventory levels will keep up with demand.
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