As we move into 2022, both buyers and sellers are wondering, what’s next? Will there be more homes available to buy? Will home prices keep climbing? How high will mortgage rates go? For the answer to those questions and more, we turn to the experts. Here’s a look at what they say we can expect in 2022.
Odeta Kushi, Deputy Chief Economist, First American:
“Consensus forecasts put rates at about 3.7% by the end of next year. So, that’s still historically low, but certainly higher than they are today.”
Danielle Hale, Chief Economist, realtor.com:
“Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise. And with more than 45 million millennials within the prime first-time buying ages of 26-35 heading into 2022, we expect the market to remain competitive.”
There seems to be a consensus that rates are on the rise, but what does that actually mean in terms of actual percentage points? See our graph below:
Putting these growth numbers into a deeper perspective, Freddie Mac reported that in 2018 the average US mortgage rate was 4.54%. So, while rates are on the rise, they continue to remain significantly lower than recent years past.
National predictions are great for a macro scope, but we also wanted to know what was happening here in our own backyards of Northern Michigan, so we consulted our go-to mortgage expert for his local perspective:
Jeremy Kilbourne, Lead Loan Officer, Arch Mortgage North:
“Mortgage rates relative to inflation are still very affordable right now. Rates will go up throughout the year but if you look at where rates were before covid, or even over the last 20 years, we will still be historically low.”
Lawrence Yun, Chief Economist, National Association of Realtors (NAR):
“With more housing inventory to hit the market, the intense multiple offers will start to ease. Home prices will continue to rise but at a slower pace.”
George Ratiu, Manager of Economic Research, realtor.com:
“We also expect a growing number of homeowners to bring properties to market, taking some pressure off high prices and offering buyers more options.”
See our graph below for projected percentages of growth:
According to a recent interview with NPR Correspondent, Chris Arnold, home prices reportedly rose a staggering 19% in 2021. So, while home prices are predicted to continue to climb in the coming year, buyers can breathe a sigh of relief knowing it shouldn’t be anywhere near the meteoric ascension of last year.
What Does This Mean for Buyers?
Hope is on the horizon for 2022. Buyers should see their options grow as more homes are listed and some of the peak intensity of buyer competition starts to ease. Just remember, rising rates and prices are a great motivator for you to find the home of your dreams sooner rather than later so you can buy while today’s affordability is still in your favor.
What Does This Mean for Sellers?
Make no mistake – this sellers’ market will remain in 2022 as home prices are projected to continue climbing, just at a more moderate pace. Selling your house while buyer demand is so high will truly put sellers in the driver’s seat. But if you’re considering selling, don’t wait too long. With more listings projected to become available, your ideal window of opportunity to stand out above the crowd won’t last forever. Work with a trusted agent who knows your local market and current inventory conditions to accurately price your home and ensure you have the support you need to make educated and informed decisions about selling in the coming year.
Bottom Line
If you’re thinking of buying or selling, 2022 is shaping up to be your year. Let’s connect today to discuss your goals and how you can maximize the unique opportunities you have in today’s housing market. We feel fortunate and proud to have helped 195 families in 2021 attain their homeownership dreams, and this year we’d love to help you attain yours!
