As we approach the tail end of the year, it’s important to look ahead and know what to expect in 2022. Predicting accurate changes in the real estate market has been harder than ever. With the side effects of the pandemic still lingering, experts aren’t completely confident in their research.
If there’s one thing the real estate industry learned from 2021 is that anything is possible. However, we still need to have some expectations about where the industry is headed in order to make informed decisions. Here are some market trends that may shift for the new year.
Home Prices Will Begin to Stabilize.
This year saw record breaking numbers in housing prices with multiple offers and buyers at times paying cash and waiving the appraisals. It's safe to say home prices have been mostly out of control. Year-over-year jumps are in the double-digits across most American cities and towns. Although one key factor in a possible decline is that mortgage prices will begin to rise. If mortgage rates begin to rise,the number of buyers in the market will decrease. Although no one's predicting a decline in home prices, most analysts expect prices to appreciate at a slower clip than what has been the trend lately.
Foreclosures Will Continue to Rise
For the past year and a half, foreclosures were practically nonexistent. This was in large part due to a nationwide foreclosure ban due to the pandemic. However, This ban expired back in July of this year, which resulted in an uptick in foreclosure rates.While actual volume is still well below historical norms, foreclosures will likely continue to creep up as the new year rolls around particularly as more and more homeowners exit forbearance programs. As financial struggles continue in many American households, we can expect the foreclosure rate to start climbing.
Inventory is Expected to Improve
Although foreclosures are negative experiences for former homeowners, the increase in vacant homes means there’ll be more homes available for sale, possibly at more affordable prices.
One of the biggest issues faced by the real estate industry in 2021 was the lack of housing inventory. Inventory was actually at its lowest ever at one point in the year, with only a 3.5-month supply of homes for sale. This essentially means it would take 90+ days to sell a home in the current market, which is much longer than usual. While next year probably won't mark a huge
turnaround on the inventory front, buyers should see some relief.