2021 was a wild year for the Real Estate Market. Prices were sky high, inventory was at an all-time low. We felt like we were on a roller coaster, holding on for dear life. Listings were going in a day, for over asking. People were paying cash, which knocked out anyone with only a downpayment and mortgaging the rest. It was especially difficult for young couples and families looking to purchase their first home. Many of the analysts are not predicting quite a year like we just had. Below are four (4) trends that economists are expecting in 2022.
- Foreclosures will increase. Foreclosures have been largely non-existent in the past 2 years. This has been due to a national foreclosure ban. However, in July 2021, the national ban was lifted. Since then there has been a significant increase in the foreclosure rate, (up 34% over the second quarter according to ‘The Motley Fool’, Nov 13, 2021). All indications are that the default rate will continue to increase.
- Home prices will begin to stabilize. This past year, home prices scored. reaching record highs. Fortunately for home buyers, those huge price jumps may be numbered. No one is predicting a decline in home prices, however, most forecasters are predicting a much slower pace.
- Mortgage rates will increase. The Federal Reserve has indicated there will be possible increases in an attempt to curb rising inflation. The Mortgage Bankers Association also predicts an uptick in interest rates, possibly hitting 4% by the end of 2022.
- Inventory should increase. In 2021, the lack of inventory was at an all-time high. With no shortage of buyers and limited sellers, the demand was extremely high. This of course led to rocketing home prices. People were paying over asking and coming in with cash. This led to a wild real estate market. We won’t see a huge reversal in the Real Estate Market, however, we should see some relief. This inventory shortage has been improving slowly over the past few months and is expected to continue throughout the year.
In conclusion, most experts are expecting the 2022 Real Estate Market to be a little closer to normal. No one is predicting we will do a 180-degree turn-around. I’m not sure what normal is at this point. Heading into year three of a global pandemic, who does?