2022 United States Housing Market Forecast
The ripple effects of the pandemic are continuing to move through our lives, including the real estate market. From many parents pulling out equity on their homes to help their adult children purchase a home in this low-interest rate market to investors jumping to diversify their portfolios to focus on the shift that working from home might bring, the market has been nothing short of wild.
Affordability will continue to be at the forefront of everyone’s focus for 2022. With supply chain issues and labor shortages still causing cloggage for new home construction, this will lead to fewer homes on the market which could still result in record-high sales. Even with this being a factor, buyers in the coming months could still find favor with the market. Sellers will still remain in a very strong position, but price stabilization and competitive interest rates may bring some relief to those looking to purchase.
Lawrence Yun, chief economist for the National Association of Realtors, predicts that home sales will notch lower by 2% in 2022 because of higher mortgage rates, but this is only in comparison to one of the hottest years in real estate that we’ve ever seen. Rates are likely to hit 3.7% by the end of 2022 on a 30-year rate after consistently staying around 3% for most of 2021. He states that home sales will not crash thanks to job gains, investor demand, and the work-from-home reshuffle. He expects for home sales to rise 3% to 5% nationally once housing supply begins to meet demand.
In sum, the overall trend that we’re expecting to see is that low supply will continue to drive prices up, but as supply logistics begin to flow more smoothly, buyers will begin to have a greater advantage in the market. As technology and work environments continue to evolve forward, we can still expect that it’s a great time to both purchase, invest, and sell. 1031 exchanges from single-family homes to multi-family properties as the workspace continues to move to working from home might be a great business decision to consider. Either way, we’re expecting 2022 to continue to progress forward for the Bay Area and the state of California.