There’s no denying that the housing market faced unprecedented growth in 2021. As we approach the end of the year, potential home sellers and buyers are wondering one thing. What will the housing market bring in 2022? Will home prices go down in 2022, or will they continue to soar?
While no one can make 100% accurate real estate predictions, 2022 is sure to be an interesting year. Nothing can be in stone, but Robert DeFalco Realty is bringing you the latest in housing market predictions. Please keep reading to discover what we think will happen to home prices in 2022.
Home Prices in 2022: Housing Market Predictions
The housing market saw a massive boom in 2021. A combination of demand and supply, job recovery after the pandemic, and low mortgage rates resulted in 2021 being a seller’s market. Let’s explore whether this will change in 2022 and what to expect from the housing market.
High Demand and Resulting High Home Prices
We have seen demand soar in 2021, but what will happen in 2022? According to experts, demand will continue to rise. While this will be at a lower rate, it will remain strong. With demand remaining high throughout the U.S., prices will also remain high. This is great for home sellers.
One of the biggest indicators of high demand is the number of days homes remain on the market. Normally, home sales slow down in December and soar in the spring and summer months. Usually, homes would stay on the market for approximately 85-100 days in December. However, this has shifted dramatically. The median number of days homes stay on the market is now 49. If this continues, it’s unlikely that we will see home prices dropping.
We also see more immediate sales than ever before. According to Altos Research, we see offers within hours or days of the listing going live. They noted almost 23,000 immediate sales in a single week. This, too, indicates strong demand and high home prices into the next year.
Change in Mortgage Rates
One of the major reasons the demand is so high is because of the low mortgage rates. This is making home-buying more affordable. However, if mortgage rates were to rise, this would no longer be the case. Even if mortgage rates rise, this will happen at a slow rate. As such, we can continue to see high home prices in the beginning of 2022.
Lower Number of Price Reductions
Another signifier we’re focusing on is the percentage of price reductions. It’s fairly common for home sellers to overprice their homes and then adjust to increase interest. However, this has reduced. Usually, the housing market sees approximately 30-35% of sellers adjust the listing price. Currently, this is at 27%, and the percentage keeps going down.
Because of the high demand and limited supply, it’s a seller’s market. As such, they’re not willing to cut their prices as buyers are willing to meet their home prices. Even if this eventually falls, it doesn’t seem to be the case any time soon.
Low Inventory Issues Aren’t Going Away
Low inventory has been an issue throughout 2021 and doesn’t seem to be going away anytime soon. From 2020, the inventory of unsold homes has decreased even further. According to the NAR, it has fallen 12% to only 1.25 million.
Because of this, it’s unlikely to see home prices dropping in 2022. Basic economic principles dictate that high demand and low supply boost prices. With inventory at an all-time low, the housing market will continue to be competitive. While this is excellent news for sellers, it’s less so for buyers. Because of the market’s competitive nature, buyers will likely have to wait longer to acquire a home.
Will Home Prices Go Down in 2022?
From what we see in the housing market, it’s unlikely that home prices will fall in 2022. According to the National Association of Realtors (NAR), the median price of homes increased 13.1% from 2020. As of September 2021, the median price of a home was $353,900. This is an increase of more than $41,000 in a single year.
If conditions remain the same in 2022, the housing market will continue to favor sellers. Expect home prices in 2022 to continue rising. However, this may not be as much as 2021.
So, what does this mean for home buyers and home sellers? Sellers will continue to benefit from the high demand and limited supply. With homes selling so fast, there’s never been a better time to put your home on the market.
As for home buyers, they can take advantage of the low mortgage rates to finance their homes. However, they should expect home prices to remain high. If they find a home they’re interested in, they should act fast. Waiting too long might result in the home being purchased by someone else.
Robert DeFalco Realty Can Help You Navigate Home Prices in 2022
This has been our comprehensive overview of home prices in 2022. While it’s based on data and predictions by experts, it’s always important to remember that the housing market can change without notice.
Predictions can only give you an idea of what’s to come, but you should never rely on them completely. Deciding to sell your house or become a first-time homebuyer is a personal decision that depends on your finances and personal circumstances.
We know that real estate and the housing market are difficult to navigate. Fortunately, you don’t have to deal with this alone. The experienced realtors at Robert DeFalco Realty can help. While you may not always be able to trust predictions, you can always consult realtors and expect them to guide you through the buying and selling processes.
Our real estate agents can help you capitalize on 2022 home prices and make the most of the housing market. You can reach out to us by visiting our various New York offices or by calling us at 718-987-9700. Alternatively, you can contact us via our website, and we’ll make sure to get back to you ASAP.