The Housing Market in 2022: Will We See a Decline?

It’s been quite the year in 2021 for the housing market. As we battled our way through COVID 19, we made adjustments to meet the demands of the new virtual real estate environment and manage our client’s unique needs. As real estate professionals, that’s what we do! Pivot, adapt, and grow. With 2021 about to close out, what do we need to be ready for in 2022? Here are the top predictions and insights for the housing market in 2022:

The Demand Won’t Fizzle Anytime Soon

It’s been incredible to see the demand for homes over the last year. With so many buyers looking to settle into their new home, houses were flying off the market in record speed. However, will this continue in 2022?

According to a recent housingwire.com article, “The first signal we look at to forecast the strength of the housing market is days on market—how fast are homes moving? Right now, we’re seeing a median of 49 days on market and climbing, as it normally does this time of year. A typical December would see market time at 85-100 days.”

With those numbers, the market is showing movement still taking place, and at a much higher percentage than normal years. In fact, Zillow is predicting more than 6 million people to buy a home in 2022! It’s safe to say, we will continue to see a high demand for homes next year.

The Home Buyers of 2022:

Who will make up the buying market in 2022? Much like 2021, the Baby Boomer generation continues to hit retirement years. This means a couple things when it comes to real estate. Many Boomers are looking to sell their homes, but they also want to move into something that fits their new lifestyle. Then there are the millennial buyers—many of whom are looking to buy for the first time. And with the rates low and the flexibility of telework—now’s the time. As a real estate pro, you need to ensure you’ve got a sound marketing strategy for these two types of prospects.

Where’s All the Houses?

One major factor that influences demand is supply. When the supply is low, the demand is high (are you having economics class flashbacks yet?) Right now, home inventory is remaining quite low. According to an Atlos research study, we are at around 350,000 single family homes on the market right now. Last year at this time we were around 480,000 reflecting a 27% decrease of 130,000 homes. Yes, it’s normal to see a decline in listings this time of year. And with the Spring around the corner and so many new home developments taking place, we very well could see this reduction in homes available rebound a bit. However, it won’t be enough to make the high-demand atmosphere switch quite yet.

Another influence on demand will be interest rates. If those start to creep up, you may see the housing demand go down as fewer potential buyers will be willing or able to make a move.

High Home Prices Probably Aren’t Going Anywhere

In 2021, we not only saw record amounts of home sales, but we also saw record high prices. This was due to many factors, but some of the top being the high demand for homes and low interest rates. With 2022 on the horizon, experts are predicting the home prices will remain high. According to Altos research data, earlier this month the average single-family home price was around $375,000. In comparison to the data from last year, this shows about a 10% increase. As a real estate professional, it’s important to continue to navigate the high home prices and competition with your clients. Be sure to inform them of the potential outcomes, or push-backs, and some of the ways people are winning bidding wars.

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