As we near closing out 2021 and look back at this whirlwind year, we realize there’s no rest for the weary as this dynamic housing market spills over into 2022. Record prices, supply shortages, increased demand, less inventory and skyrocketing competition made the headlines.
Some of this year’s patterns will ripple into 2022 and spur new trends. At Halpern Residential, we try to stay ahead of the game so we can help out clients make their best strategic decisions. As we peer into the looking glass, here are our top eight housing market predictions for 2022.
1. Expect A (Somewhat) More Buyer-Friendly Market
With labor and supply chain issues producing less inventory and increasing higher demand, it’s been a Seller’s paradise across the country, but that trend is shifting. The Home Buying Institute reports that a complete shift to a Buyer’s market is unlikely, however, it will ease up as city governments and homebuilders started focusing efforts on increasing housing inventory into 2022.
2. Expect More Inventory In Early 2022
With pandemic-induced labor and lumber shortages, the housing inventory took a nosedive. We’re seeing more listings come online which could help cool off the housing market – just enough to feel some relief. Buyers in metro Phoenix will see an uptick in options as new listings traditionally spike in January and linger through the first part of Q1.
3. Don’t Expect Home Prices To Drop
Even as the market softens, its continued acceleration will still spur price hikes and bidding wars. You can expect housing prices in some markets to dip slightly, while prices may continue to rise in others. The Mortgage Bankers Association predicts the median price for homes will see a 15% year-over-year gain to $362,000 during Q1 but will slow from there further into 2022. In Phoenix, 15% gains year-over-year for 2022 seem likely.
4. Don’t Expect Mortgage Rates To Remain At Their Lows
Low mortgage rates in 2021 propelled many current homeowners to refinance and encouraged buyers to look for their dream homes. However, the Mortgage Banking Association forecasts higher rates are on the horizon. You can expect a 30% + increase for a 30-year fixed-rate mortgage, averaging anywhere from 3.7% to 4% by the end of 2022.
5. Expect The Suburbs To Remain Hot
As companies continue to normalize remote working, you can expect to see more people leave expensive urban areas for the value of the suburbs. Affordable suburbs surrounding major metro areas across the country are swelling with both new in-state and out-of-state residents.
6. Expect Millennial Buyers To Remain Very Active
Though millennials don’t dominate the housing market, many within the ages 25-40 demographic are reaching peak home-buying age. As millennials enter the market as first-time home buyers and increase competition, you can expect some procedural industry changes in the near future. With millennials increasing their buying power, realtors and the housing industry will continue to accelerate workflows to more digital formats, such as e-signatures, digital forms and increased digital interactions, with less reliance on face-to-face interactions.
7. Expect Second Homes For Airbnb And Rental Properties To Continue To Rise
The short-term rental industry was booming during the pandemic. Homeowners see purchasing rental properties as a smart investment for passive income. With vaccines and booster shots readily available, and travel restrictions easing, more people are spending more on travel and lodging. According to AirDNA, the average number of listings on Airbnb and Vrbo are expected to increase by 20% in 2022 to over 1.3 million listings.
8. Office Spaces And Large Backyards Top The List
Americans are conditioned now to make the best use of the space inside and outside their homes. As remote working and seclusion becomes a bit of an American norm, people will want to make the most use of a new property. New homeowners are placing a higher priority on listings that include home offices and spacious backyards. People’s homes are becoming a central command center, so they’ll need designated areas to separate the various facets of their lives.
At Halpern Residential, we always monitor market trends and forecasts to strategize how we can best be a vital resource for our clients. If you’re a buyer or a seller trying to navigate the Phoenix metro housing market, call us and we can help you navigate your home buying journey into 2022.