HOUSING MARKET 2022. WHAT TO EXPECT
Almost without exception, housing analysts are predicting that the housing market will slow down in 2022. At least in terms of price appreciation.
Home Prices Continue to Go Up
There is good news for both home sellers and home buyers if the experts’ predictions come to fruition. Virtually every forecast model predicts that home price appreciation will slow in the coming year. Zillow, for example, indicates a 13.6% growth rate in 2022. Fannie Mae anticipates a 7.9% growth rate for the year. While these percentages are still well above the norm of the past ten years, they are significantly lower than the 19.9% price increase between August 2020 and August 2021.
What’s Going On in the Market?
The answer is that a lot is going on. Inflation, for starters, was brought about by the supply chain issues created by the pandemic. To try and control inflationary pressures, the Federal Reserve is likely to increase interest rates. Higher interest rates for mortgages would put downward pressure on home prices. Mortgage forbearance protections offered under the pandemic are also coming to an end.
But wait, there’s more. If employers bring workers back to the office, then the second home and suburban markets will start to cool as the flight from the urban market wanes.
A Word of Caution for Home Buyers and Home Sellers
Experts like Zillow and CoreLogic before the pandemic were predicting that home prices would fall in early 2021. The reverse happened. This quote from Zillow CEO Richard Barton should serve as a warning for anyone that relies too heavily on housing market predictions, “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated.”