No doubt about it — the real estate market has been white hot in 2021. But if you didn’t make a move this year, and you’re thinking about buying or selling — or both — next year, you’ll want to know what to expect.
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As of Nov. 10, the 30-year fixed mortgage rate was 2.98%, which is actually the lowest it’s been since Sept. 23. If you’re planning to buy a house, you’re almost definitely pleased that rates aren’t exactly skyrocketing — but will it last?
Several real estate experts have weighed in on where they think the real estate market is headed in 2022. Here’s what they had to say.
Big Cities Could Surge Again
Jonathan Spears, a real estate agent and founder of Spears Group, based in Santa Rosa Beach, Florida, said he believes market gains will continue across the U.S. in 2022. Specifically, as people continue to become more comfortable returning to big cities, he expects to see the largest surges in metropolitan markets in the Northeast, Southeast and the West Coast.
“Despite some market prognosticators forecasting increases in market values upwards of 15%, because the market experienced an increase of over 30% in the previous year, it may actually seem as though real estate markets have slowed,” he said. “Because of low inventory, we won’t see as high of rates of absorption simply because the inventory is not there.”
Despite that, he anticipates solid growth across the U.S. real estate market in general.
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The Rate at Which Home Values Are Appreciating Could Slow Down
Andrina Valdes, COO of Cornerstone Home Lending, Inc., pointed to statistics from a variety of housing authorities — including Fannie Mae, which predicts a 7.4% home appreciation for 2022, and the National Association of Realtors, which predicts 2.8% appreciation for existing homes and 4.4% appreciate for new homes — when explaining her prediction for home prices in 2022.
“While home values are not expected to depreciate, the rate at which home values are appreciating is expected to slow down,” she said.
Mortgage Rates Could Rise — But It Could Still Be a Good Time for Buyers
Valdes said mortgage rates are projected to rise a bit next year, but still remain historically low, while buyer demand is expected to stay strong.
“The market is likely to cool compared to 2021, but it will still be active,” she said. “It may still be a seller’s market in many areas, but there’s likely to be more opportunities and wiggle room for homebuyers.”
Consequently, she said it will still be a great time to buy a home.
“A ‘priced out’ buyer should be able to find many more options,” she said. “Experts also reinforce that 2022’s housing market is not at all likely to crash — the conditions we’re seeing are nothing like those that led up to the crisis of 2008.”
Danielle Hale, chief economist at Realtor.com, agreed that buyers will likely be able to get more for their money in 2022.
“Home asking prices have decelerated in the second half of 2021, with median listing price growth slipping from a peak 17.2% in April to just 8.6% in October,” she said. “Sales prices have slowed somewhat, but not yet as rapidly.”
However, she said this is expected to change.
“With prices near all-time highs and mortgage rates expected to rise, we expect this slowdown in prices to continue,” she said.
Good news for those on both sides of a real estate transaction, Jason Gelios, a realtor in Southeast Michigan, said the 2022 housing market will continue to transition to favor home buyers while prices stabilize, but remain strong.
“Many first-time homebuyers who weren’t able to compete with stronger homebuyers during the hyperactive sellers’ market will have a chance to bid on homes in 2022,” he said. “However, buyers should expect to pay close to the asking price, as the housing inventory will more than likely be less than where it should be.”
Inventory Will Likely Still Be Low
Bill Samuel, a residential real estate developer and owner of Chicago-based home-buying company Blue Ladder Development, agreed that the lack of homes for sale will probably still be an issue next year.
“Expect a very competitive market through 2022, with multiple offers on most of the properties you are interested in,” said Samuel, who is also a licensed real estate broker. Available inventory is still low, but it is slightly higher than it was at the start of 2021. While the market may not be as insane as the last several months, it is still much more competitive than before COVID started.”
He said the pandemic has improved the housing market by limiting the supply of homes for sale and increasing buyer demand with low interest rates and stimulus payments.
“Foreclosures and evictions will resume their normal course starting at the end of 2021,” he said. “So we will likely see an increase in the supply of homes for sale.”
However, he said that while the supply of available homes will likely increase throughout the next year, it is still expected to be much lower than pre-pandemic levels.
“In my opinion, the market will continue to remain strong throughout 2022, with continued low supply,” he said. “However, I don’t expect demand for housing and the overall market to be quite as hectic as 2021.”
Only time will tell how the real estate market performs in 2022. Hopefully these expert opinions will give you something to think about as you start making plans for the new year.
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This article originally appeared on GOBankingRates.com: Here’s Where Home Prices Are Headed in 2022, According To Experts