The real estate market may see some return to normalcy, but rising prices, rents and interest rates and obstacles of construction will continue to trend in 2022.
With an increasing number of households throughout the U.S., homebuyer activity has accentuated the housing shortage across the U.S. in 2021 – in particular for homes at entry- and mid-level price ranges. With current supply chain issues, labor shortages and regulatory practices further slowing new home construction, houses aren’t being built fast enough to meet demand, and home prices are rising fast as a result.
Looking ahead at the 2022, homebuyers, sellers, renters and investors can expect some more of the same when it comes to continued high demand, with some return to seasonality and a rise in interest rates that may have a mild impact on real estate transactions.
Here are experts' housing market predictions for buyers, sellers, renters and new construction in 2022 from Devon Thorsby at Real Estate News US:
Buying
In recent memory, mortgage interest rates have been at or near historic lows, even with some fluctuation.
In 2022, expect interest rates to rise somewhat – but that doesn’t mean they’ll skyrocket. The Federal Reserve has signaled intent to raise interest rates during the year to combat inflation. While an increase in mortgage interest rates could squeeze out the homebuyers who are on the cusp of being able to afford a home purchase.
Selling
One reason why a lot of sellers haven’t jumped at the opportunity to sell their homes – and why it’s not likely in 2022, either – has to do with the low interest rates that made refinancing a smart move within the last two years.
Renting
In 2021, the rental market rebounded from a rough start to the pandemic, which saw many people leaving apartments and seeking more space through homeownership. Rental demand has largely returned to major cities, and continues to exist throughout suburban areas as well. Rental information company Zumper reports that thus far in 2021, the national median rent for a one-bedroom apartment rose 12.1%, and two-bedroom rents increased by 13.2%.
New Construction and Development
The rate of new housing construction has been behind the pace of new household creation for years, plagued by local zoning issues and labor shortages that began in the Great Recession. The pandemic added further materials shortages, rising prices and supply chain-related delays.
As a result, construction is slow to ramp up and ease housing demand. “We’d have to double the pace of putting up new single-family homes,” Miedler says.
While supply issues are prevalent now, they are expected to improve eventually, and builders and developers are prepared to get working with approved permits once materials are available.
Thorsby, D. (2021, December 15). What to Expect From The Housing Market in 2022 . Real Estate US News. Retrieved December 2021, from https://realestate.usnews.com.