Last year was challenging for potential homebuyers. While home prices rose nationwide, buyers scrambled for properties and engaged in bidding wars, resulting in homes selling exponentially higher than the listing price.
Economists predict that the market will be a little more relaxed in 2022. However, it will take strategy and perseverance to chase and attain the homeownership dream. Here’s what to expect and prepare for when house hunting.
More buyers than available homes
A healthy real estate market has inventory that is still unsold after six months, meaning it would take that long to sell those homes at the current sales rate. According to the National Association of Realtors, the existing unsold inventory is half of that, resulting in fewer available options for potential buyers.
The good news? The real estate industry experts predict the supply of homes for sale will increase during 2022. With more available inventory, multiple offers and intense bidding wars will start to ease. However, buyers will still outnumber sellers, so the market will remain very competitive.
Home prices will rise, but at a slower rate
The expected increase in home prices year-over-year is slower than in 2021. According to the National Association of Realtors, home prices will rise by 2.8% in 2022 – far less than the 14.7% increase in 2021.
Although predictions vary, the projected percentage gains remain in the single digits. Fannie Mae expects a 7.4% rise, Freddie Mac puts the increase at 7%, and the Mortgage Bankers Association projects a 5.1% increase.
Increase in mortgage rates
At the end of 2021, the average fixed 30-year mortgage rate remained at historic lows at 3%. However, economists predict that interest rates will rise in 2022; but it is important to remember that this is only a forecast. Interest rates will remain relatively low, even if they rise as predicted.
The National Association of Realtors predicts that the 30-year fixed-rate mortgage rate will rise to 3.7% by the end of the year. According to the Mortgage Bankers Association, there will be a 4% increase, while Fannie Mae & Freddie Mac expect the 30-year fixed rate to average 3.3% and 3.5%, respectively.
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