Experts predict what the housing market will bring in 2022

Experts predict as mortgage rates rise, prices are expected to moderate, but low inventory will continue
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Last year was a great year for selling a home, but not a great year if you tried to buy one. Apartment prices rose sharply and the number of apartments for sale fell. Although the 2022 housing market is still leaning towards sellers, it offers a slightly better chance for buyers to seize their dream homes.

The story of 2021 was how quickly apartment prices accelerated. The median national apartment price reached $ 362,800 in June, an all-time record, according to the National Realtors Association. The Case-Schiller housing price index peaked in August, when prices rose 19.8% year-on-year.
Phoenix house prices were up 33.3% year-on-year, apartment prices in San Diego were up 26.2% and apartment prices in Tampa were up 25.9%.

Low mortgage rates and limited supply have helped push prices up. There were only 1.38 million homes for sale nationwide in June, down 23% year-over-year, according to Redfin.

"The ongoing epidemic, including its systemic impact on the U.S. economy and the way Americans live and work, has made the 2021 housing market anything but typical," said Daryl Fairweather, Redfin's chief economist.
Remote work, low mortgage rates, lack of building materials and inequality in wealth that allowed the influx of affluent Americans to buy vacation homes, to name just a few factors, came together to create a historic year for real estate. Buyers paid more for homes, bought earlier than planned, searched outside their hometowns or all of the above. The hectic housing market of [2021] was one of the things - but it may be more balanced in 2022.

According to Redfin data, the typical home was sold in 15 days last year, and more than 60% left the market within two weeks.

The profile of buyers and sellers of NAR apartments, an annual report that this is the 40th year, found that about a third of buyers in 2021 purchased their homes at a price higher than the asking price. First-time buyers grew to 34 percent last year, up from 31 percent in 2020. This was the biggest jump since 2017. The typical first-time buyer was 33 years old.

Here's a glimpse of what housing experts expect in 2022:

National Association of Realtors
The housing market has made good progress earlier this year and is likely to normalize, said Lawrence Ion, chief economist at the National Realtors Association, the professional association of real estate agents.

"All markets are seeing strong conditions, and home sales are the best they have been in 15 years," Ion said. "The success of the housing sector will continue, but I do not expect [2022]'s performance to exceed [2021]'s performance."

He said sales may fall this year but expects them to rise to pre-plague levels. Its forecast is based on expected additional inventory in the coming months. The increased supply will be created, among other things, from the construction of new housing as well as from the end of patience for the struggling mortgage payers, a situation that will cause some of the apartment owners to sell.

"With more housing stock coming to market, the many intensive offerings will start to calm down," Ion said. "Apartment prices will continue to rise but at a slower pace."

Ion predicts that mortgage rates will rise to 3.7% in 2022, pushed by sustained inflation.

NAR surveyed more than 20 economics and housing experts to gauge their expectations for housing price growth, new home sales and existing home sales for 2022. The group predicted that exterior apartment prices would rise 5.7 percent this year. Sales of new apartments are expected to rise to 920,000 in 2022, compared to last year, when there are expected to be about 800,000 new home sales. Sales of existing homes are expected to fall to 5.9 million, down from last year, when there are expected to be about 6 million sales of existing homes.

Experts have identified 10 "hidden gem" housing markets across the country. The locations in the list are:
Knoxville, Tenn .; Spartanburg, SC; Fayetteville, Ark .; Dallas-Fort Worth; Huntsville, Ala .; Tucson; San Antonio; Daphne-Fairhope-Foley, Ala .; Pensacola, Fla .; and Palm Bay-Melbourne, Fla

Realtor.com
Homebuyers will have a better chance of finding homes in 2022, but will face a competitive seller market, said Daniel Hale, chief economist at the real estate listing site.

"Accessible prices will be more and more challenging as interest rates and prices go up, but working remotely may expand search areas and allow younger buyers to find their first homes earlier than they might otherwise find," she said.

Hale expects the rise in prices for existing homes to be 2.9 percent.

"Reasonable challenges will prevent prices from advancing at the same pace we saw in 2021, even when continuous supply-demand dynamics mean that prices continue to grow across the country," she said.

Hale says sales of existing homes will rise by 6.6%. She predicts that in 2022 there will be the second highest sales in the last 15 years, over them only in 2021.

The number of homes on the market will increase by 0.3 percent, and ground-level housing starts will rise by 5 percent, she says, and she expects the fixed-rate mortgage for 30 years to average 3.3 percent most days of the year and be 5 percent. 3.6 percent by the end of the year.

Ownership of homes among Hispanics will continue to grow, Hale said.

"Hispanic homebuyers are already a significant share of the housing market, comprising more than 1 in 10 recent homebuyers, but are still underrepresented relative to their share of about 1 in 5 in the U.S. population," she said. “This demographic group is expected to play a growing role in the housing purchase market. It is worth noting that the recently successful Hispanic apartment buyers were younger than the population of recent home buyers in general, and most of them were first-time home buyers. ”

Online real estate brokerage does not anticipate that the housing market for 2022 will be more predictable than it has been in the past two years.

“2022 will bring more balance to the housing market. But do not expect a market of buyers; Just more choice, less madness and slower price growth, ”Fairweather said. "We seem to be in a hurry to buy houses at the beginning of the year before the interest rate on the mortgage rises. That early onslaught of demand will deplete the supply of homes for sale. In the second half of the year, a necessary increase in new construction will slightly increase sales. In 2022, sales will be 1% higher than in 2021, and by the end of the year, the increase in apartment prices will slow to 3%. ”

Fairweather expects mortgage interest rates to rise to 3.6% by the end of 2022, a trend that should moderate the rise in house prices. With the slowdown in double-digit price growth and a slight rise in newly built homes, it expects the number of homes on the market to rise to a 2018 high of 7.6 million. Because of rising house prices in cities like Austin, Atlanta and Phoenix, shoppers will move away from the sun belt toward cheaper cities in the rust belt like Columbus, Ohio; Harrisburg, and Indianapolis, she watches.

Zillow
Economists at the online marketing company for the sale of homes say the housing market may not reach its incredible 2021 highs, but they expect it to be anything but slow.

Zilo's forecast predicts 11 percent growth in home value in 2022, down from 19.5 percent in 2021. It expects sales of existing homes to total 6.35 million, an increase of 6.12 million in 2021.

Zillow economists say market forces that have given sellers a hand over the past two years or so - tight supply after years of underground construction and increased demand due to telework, U.S. demographics and low mortgage rates - will continue this year as well. They expect wars for offers on many homes, especially as the market heats up during the spring and summer shopping season.

A year ago, Zilo economists predicted that Austin would be the hottest market of 2021 as part of the "solar belt leap." In 2022, they say, the Sun Belt leap will expand to smaller Sun Belt cities as price increases in the star markets of 2021 make the less expensive markets nearby more attractive.

Because Americans are taking advantage of the flexibility of working remotely to move to larger homes in more reasonable markets, Zilo economists predict that more foreign generation will buy "second homes" - vacation or investment properties - before primary residence. As prices and mortgage rates rise, Zilo economists expect, many homeowners will upgrade their existing homes instead of trying to wade back into the market to trade. They predict that the momentum of renovations will continue.

National Association of Home Builders
Low inventory and strong demand are expected to continue to drive the housing construction industry by 2022.

Confidence in single-family builders remains high at the end of 2021, recording 84 in the NAHB / Wells Fargo Housing Market Index. It peaked at 90 in November 2020, cooled slightly to start in 2021 and then steadily rose to close the year.

“If we think, why is it still in the 80s despite all the challenges?” Said Robert Ditch, chief economist at NAHB. "It's basically a lack of existing home inventory."

Ongoing supply-side problems will limit the pace of construction and also cause apartment prices to rise. The bottleneck in the supply chain has made the devices more expensive and rare. The Biden administration doubled customs duties on Canadian wood to 18%, which increased raw material costs.

"It takes longer to build, and it costs more," Ditz said. "Using inflation data [the producer price index], we are building a basket of goods related to residential construction, and currently these prices have risen by about 19% year-on-year."

The shortage of skilled manpower continues. Ditz said there are more than 400,000 open jobs in the industry, in addition to the fact that NAHB estimates that the construction industry needs to add 740,000 workers a year to compensate for the industry’s retirement and growth.

Because of these first winds, Ditz predicts the beginning of family home starts in 2022 at just over 1.1 million, a growth of just 1 percent. This will be a significant decrease from the growth of 13% in 2020 and the growth of 9% in 2021.

"2020 and 2021 were a change in production levels," Ditz said. “2022 will represent an increase of about 25% in the volume of construction for individuals from where we were in 2019. So there was a drop in spring 2020, an unsustainable recovery during the second half of 2020, a bit of a cooling to the level of 1.1 million. We think it will continue in 2022, despite some of the challenges with the likelihood of housing that we expect to grow. ”

Ditz expects new home sales to fall by about 6% from 2021 when the final numbers arrive, but to rise by 8% in 2022.

"Growth rates in new home sales, I would argue, are a bit misleading," Ditz said. “Because in the second half of 2020, when housing was that bright spot, we had that unsustainable period of unusually strong and historically strong demand. Builders took a lot of sales and then withdrew to offer them in early [2021] so they could build their orders. So when you look at the counts of sales contracts signed by builders with buyers, it actually went down a bit. It's part of the cooling process. "

The rise in home values ​​has increased equity, which will continue to fuel the renovation momentum. After a growth rate of 10 percent in 2021, it will cool to a 6 percent increase in 2022.

Ditz expects a 6 percent growth in apartment construction, noting that in the multi-family area 95 percent of the construction will be for rent. Typically, this number is around 80 percent.

Mortgage Bankers Association
The Real Estate Financing Industry Trade Association predicts that mortgage sources for purchases will grow by 9% in 2022, to a high of $ 1.73 trillion. MBA economists predict renewed funding sources will fall 62 percent to $ 860 billion this year, down from $ 2.26 trillion in 2021.

Total mortgage sources (purchase and refinancing) are expected to fall by 33% from 2021 to $ 2.59 trillion. Purchasing sources are expected to rise to a record high this year, but higher mortgage rates are expected to reduce the volume of refinancing.

MBA economists predict that the 30-year fixed-rate mortgage will rise to 4% by the end of 2022.

“Lenders and mortgages and borrowers should expect an increase in mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher,” said Mike Pratantoni, MBA chief economist.

Pratantoni expects another strong year for the housing market.

"Home builders will be more able to overcome the current shortage of building materials and need to be able to increase the pace of construction to meet the high demand for buying," he said. “More new homes being built and more homeowners advertising their homes for sale are expected to lead to some slowdown in apartment price growth next year. This is good news for the many potential buyers who are currently pricing or delaying decisions due to low delivery conditions and a steep appreciation in house prices. ”

Credit availability is about 30% lower than pre-epidemic levels.

"The supply of mortgages will have to grow modestly so that buyers can gain access to financing to buy their home," said Joel Kahn, an MBA economist. "This will be important for the wave of potential homeowners approaching home ownership."

Bankrate.com
Greg McBride, chief financial analyst at the financial site, predicts that the 30-year fixed mortgage rate will peak at 3.75% during the year and fall back to 3.5% by the end of the year.

"Long-term interest rates will move higher in the first half of the year, but by the end of 2022, fears of a slowdown in economic growth will break it and bring them back," he said. "It will be higher than where mortgage rates began this year, but will end at levels not seen before before the epidemic began in 2020. The decline in refinancing activity will lead to much competition between volume-thirsty lenders and many lenders with much better-than-average interest rates."

McBride expects home equity credit lines to be 50 basis points (0.5 percent) higher by the end of the year. He expects the HELOC rate to be 5.05 percent and the home equity loan rate to be 6.25 percent.

"Homeowners with existing equity lines of credit can expect their interest rates to move higher alongside the Fed's interest rate hikes," he said. “The average HELOC rate will go up more than that, however, because many of today's promotion offers will be below 3% by the end of 2022. In equity loans, a fixed rate product offered by far fewer lenders. "The average interest rate will cause an increase in response to the interest rate increase, but in a more modest way, and will rise a little more than a quarter of a percent by the end of the year."

Lending Tree
After two tumultuous years, Chanel Jacob, a senior economic analyst at the online lending market, says this year should be less dramatic.

"2022 is on its way to being - at the very least - a little more stable than the last two years," he said. "But we are not yet expected to see the housing market and the wider economy return immediately to pre-epidemic norms."

Channel expects that the fixed-rate mortgage for 30 years will rise by almost 4 percent by the end of the year.

"This could make the cost of the home an even bigger challenge, especially for lower-income buyers," he said. "Fortunately, rising rates are not just bad news, as higher rates are likely to result in fewer new home buyers and a less competitive housing market in general."

Channel expects 5 percent growth in apartment prices in 2022.

"House prices in most parts of the U.S. have risen dramatically since the onset of the epidemic, but a larger supply of housing in the market and reduced consumer demand driven by high rates are expected to lead to much less growth this year," he said.