In the previous two years, we had the opportunity to witness a very atypical and interesting situation on the real estate market, which was dominantly leaning toward sellers. House prices have risen dramatically, interest rates have been very low and demand has been higher than ever. Looking 15 years behind, it is estimated that a record number of houses have been sold in the past year, which clearly indicates how extraordinary the situation has been. However, the main question at the moment is: what can we expect in the year ahead of us? How long will the current seller’s market last and will the real estate market crash? Judging by the current situation, this will not happen. We will continue to have a seller’s market, and the trends that were present in 2021 will only continue in 2022.
There won’t be any major changes by the end of 2022
The real estate experts at Premier Real Estate in North Carolina feel the current market conditions are starting to plateau and will most likely remain stable throughout the end of this year, but keep in mind that no one can say with certainty what will happen to the real estate market in 2022. The only way to find out is to wait and see, but that does not mean that we should not gather some useful information that experts in this field can provide us. It is expected that the seller’s market will remain in force until the end of the year and that there will be no major changes compared to the situation in 2021. Below you can read several reasons for such predictions from other top real estate sources.
Reasons why the current seller’s market will continue throughout 2022
1. Prices will continue to rise
Real estate prices have reached their biggest rise since 2004, and experts estimate that the trend of rising house prices will continue in the year ahead. If you thought that 2022 would be much more favorable for buyers compared to the past one, you were wrong. Yes, the market will lean a little more towards buyers, but not significantly, as many thought. Economists from Realtor.com share their predictions regarding the economic trends that await us in the coming months. It is believed that the offer will still be quite scarce. Although more house ads are expected in the spring and summer, there will still not be enough houses for everyone. This means that demand will be high, and also mortgage rates are expected to be low. All of this means that the situation on the real estate market will still be very favorable for sellers.
As we already said, we cannot know for sure what the prices will be, but Zillow predicts that they will continue to grow throughout the year. It is estimated that this growth will not be as great as in 2021, but that it will be continuous and that there will certainly be no decline.
2. Interest rates will rise by the end of the year
Another thing that is expected in the rest of the year is that there will be an increase in interest rates, and also that rates on mortgages will increase, which are currently very low. According to Redfin reports, the 30-year fixed mortgage rate is projected to rise by 0.3% by the end of this year. However, and Skylar Olsen, chief economist at Tomo, a home-buying app, says it doesn’t have to be bad news for buyers. Especially when it comes to buyers who really want to buy the house in which they will live.
Yes, this can be a bad year for speculative buyers, because it is not possible to make some significant amount of money when there are such conditions in the market. However, this on the other hand means that at least on the one hand the demand for real estate will be reduced, which can be used in the right way if you are looking for your new, dream home.
3. The general supply of real estate will continue to be insufficient
Even before the pandemic, the supply of real estate was quite low and insufficient to meet the needs of buyers. Then the real estate market became a typical seller’s market in 2020 and 2021 as there was an increase in demand for houses and at the same time a shortage of building materials. No new houses were built, and the existing ones were sold quickly and at high prices. Although the situation is expected to change slightly in 2022, experts estimate that demand will still be insufficient.
Builders are currently trying to increase production, so the supply is likely to be slightly higher during the fall and winter. However, supplies will be scarce. At the moment, we can see that there are not many houses for sale on the market, which will probably change during the spring and summer, but will still be insufficient to meet the needs of all buyers.
Based on all this, we can conclude that millennials, who plan to buy a house for the first time this year, are in a much more unfavorable position compared to their parents and older generations. Prices are higher than ever, so new generations are much more likely to need the help of parents and family to afford a home. And there is also the possibility that many will give up buying a house and significantly prolong it due to the unfavorable situation on the market. Affordability of housing is very problematic for millennials nowadays, and the worst thing is that there are no indications that this will change in the near future.
All this tells us that buyers in 2022 should be ready for what is to come. If you are planning to buy a house in the months ahead, then you need to keep in mind that the offer is limited and the prices are high, but that it will also grow in the coming period, so the sooner you find a property for yourself – the better. Prepare to make quick decisions if you want to realize your idea. Of course, this does not mean that you should overpay for real estate just because the situation is unfavorable. Make wise decisions and always make sure that the step you take is the best for you.