This past year has been a tumultuous one as Americans have had to navigate the fluctuating restrictions due to COVID-19 variants in combination with periods of normalcy. As we enter 2022, one area that remains stable is the housing market with a few foreseeable changes in market trends.
Buyers continue to express a high interest in finding the right home that meets their demands, and research shows that those participating in the market should expect another round of high prices for the first and second quarters. 83% of agents expect 2022 to remain a seller’s market; however, the year could show initial signs of a shift in direction.
What’s changing
Several factors could potentially affect the market, from a volatile workforce to shifting housing interests resulting from the pandemic. A growing number of employees are leaving their jobs voluntarily, which will have noticeable effects on housing choices as people relocate for new jobs or work remotely. This could lead to higher demand in mid-sized cities as more people consider housing with larger recreational space in remote areas.
Over a third of agents predict that more market participants are considering politics as a factor in their decisions. Whether an area is blue or red has become an increasing concern as buyers look at where they want to live. The new year can also expect more engagement from Gen Z as they dip their toes in the market. Agents predict this could lead to changes in interior design trends and the shape of the market down the road.
Interest rates are predicted to increase, which could lead to buyers securing their mortgage rates early. As pressure to buy increases and inventory becomes low, it is encouraged that those looking for a new home connect with a local agent with inventory in-office.
What’s remaining the same
Cash sales left their mark in 2021, and agents predict they will continue to persist in 2022. Buyers have been relocating from bigger, expensive cities to more affordable areas, making smaller towns cash-heavy markets.
Agents predict home prices could appreciate at historically normal growth rates of 2-3% in their market this year, and while the inventory shortage will continue to persist in 2022, a modest amount of new listings could offer buyers more options. However, inventory will continue to remain tight. If you want to sell in 2022, now is still a great time.
What’s next
With the small changes predicted to unfurl in the new year, first-time buyers will still need to make their offer impressionable. Tactics like offering appraisal gap coverage, asking for no repairs, and including an escalation clause can help new buyers win homes in a competitive market.
Overall, property values remain strong and nearly 90% of agents remain optimistic about the housing market in 2022. Though the demand and inventory remain high in 2022, agents foresee the market prices tapering toward the end of the year.