Key Takeaways:
- Many of the dynamics seen in 2021 will carry through into next year’s housing market, but at a much less frenzied pace.
- As remote work becomes a more permanent, widespread option, Millennials are taking advantage and entering the real estate market.
- We’re ready for another seller’s market. Like last year, there isn’t time to waste—contact us to start planning now!
What Buyers and Sellers Need to Know About the 2022 Housing Market
In the final few weeks of 2021, both home buyers and sellers look forward to what lies ahead in 2022. We can help build your strategy to stay competitive! Don’t wait for the real estate market to heat up during the spring and summer. Here’s what you need to know to get ahead of the competition next year.
First-time home buyers can overcome the challenging market
Recent real estate forecasts suggest that competitive will be the defining characteristic of the housing market throughout 2022. That will be especially true for first-time home buyers.
Competing levels of low inventory supply and high buyer demand will continue to hold housing market values at, or above, asking prices. Total inventory will increase by the end of 2022, but it will not be enough to slow the seller’s market.
For first-time home buyers to secure their house, they need to start early and expect competition. On a positive note, low interest rates can help new homeowners build equity faster.
Millennials are working remotely and finally buying homes
A lot has changed in these last two years. Buzzwords like “the new normal” were everywhere, along with speculations about how people lived, worked, and commuted were going to change. As we enter into 2022, we now have data reports and are beginning to see how these changes affect the housing market.
The ability to work remotely is helping the more than 45 million Millennials that make up the fastest growing segment of buyers. After an uphill battle, they’re entering the prime first-time home buying age range of 26 – 35, and changing the real estate landscape.
Millennials are leaving the glamor of big city life to take advantage of more affordable housing markets in suburbs and rural areas. As long as they have internet access, their salary remains the same. And unsurprisingly, 99% of them use technology to research the home buying market.
With 90% of managers and employees reporting that they’re happy working from home, and productivity increasing by as much as 47%, remote work is here to stay. The new normal will also create new investment opportunities as companies seek to reduce their office sizes.
Low inventory stretches into the new year
After years of underbuilding, housing supply shortages will continue to be a dominant feature of the market next year. One of the most significant factors that will carry over immediately from last year is low inventory supply.
Available housing will remain tight throughout the year. While that will generate some stress, it will also drive home values higher. Estimates of continued home sales growth will be 6.6%.
While housing inventory levels will remain lower than their pre-pandemic levels throughout 2022, a modest 0.3% growth in inventory should be enough to keep market prices from spiraling even further upward.
Sellers remain in control of the market
As we look ahead to 2022, some clear realities for the housing market begin to appear: it will remain a seller’s market. Interest rates continue to hover around a record-low 3%, providing incentives for sellers to upgrade to a larger home for a lower monthly payment.
After the refinance boom in 2020, homeowners are still in an advantageous position. With home sales expected to hit their highest level in 16 years due to Millennials entering the housing market, sellers sit in a very good position to profit. If accurately priced and, more importantly, if houses are in great condition with upgrades throughout, the real estate market will continue to be a boon for sellers.
Be Prepared for a Competitive Year
The new normal in 2022 turns out to be an old adage: the early bird gets the worm. We have the experience and can move quickly to make sure you stay competitive, regardless of whether you’re buying or selling. Contact us today to make your plan for the new year!