Housing Market Predictions 2022

The housing market in 2021 set high records including home appreciation of 19.9%. It’s tough to say whether the market will keep up with these numbers next year but there’s no doubt that 2022 is going to be strong. While the market highs we’ve seen in 2021 may not repeat in the upcoming year, experts predict that the sellers market is going to persist. After all, the 2021 housing market was one of the hottest housing markets in the history of the US based on Zillow’s Home Value Index. It will be difficult to reach these heights again and it certainly won’t happen in 2022. However, the price growth in certain areas is going to continue and the sales volume will be consistent as well.

According to Zillow’s forecast, home value in the US housing market is expected to grow by 11% in 2022. Although that’s significantly less than the 19.5% growth we’ve seen in 2021, it’s still a pretty good metric if you look at the bigger picture. Where the 2022 housing market is going to go strong is the home sales metric. The home sales are predicted to equal 6.35 million, which is 0.23 million more than in 2021. Another market that is domianting are luxury condos such as Turnberry Place Las Vegas. If this prediction comes true, we’ll be looking at the highest number of home sales in a single year since 2006. Moreover, sellers are definitely going to keep the upper hand in 2022.

Although the housing market started to cool down in the fall compared to this summer, sellers are still in a more favorable position than the buyers. The low supply paired with growing demand due to remote work has given sellers the upper hand in the previous two years and this trend is likely to continue into 2022. The high demand for housing and low mortgage rates are expected to continue well into 2022, which will lead to intense bidding wars on properties, especially during the spring and summer seasons.

When it comes to specific types of housing units, Zillow predicts that large rentals will be high in demand, mainly due to the impact of rising home values on the rental market. Given the unavoidable impact that the pandemic made on the US economy, saving up for down payment has become unimaginable for many people. This will force many to look into rentals instead of putting money down toward owning a property. Such a trend will put larger rentals such as single-family homes and Las Vegas high rise condos under the spotlight.

With more and more Gen Zers and millennials entering the buyers market, we can expect to see an increase in demand for “second homes” rather than primary residencies. The global pandemic has introduced many people to the flexibility of remote work, which in turn allowed them to experiment with housing locations. Younger generations are generally less likely to commit to one location full-time. Instead, they look for opportunities to enjoy all the amenities of a city with the possibility of moving once they find something more attractive.

With those factors shaping many people’s buying decisions, we’re expecting to see a higher demand for second homes, which are either part-time vacation homes or investment properties. Many see the purchase of a second home in a more affordable market as a great way to start building equity while taking advantage of low mortgage rates. Online home shopping tools such as Zillow’s 3D Home Tours make buying homes in a distant location easier than ever before.

Another interesting prediction made by Zillow is that the renovation boom is going to continue well into 2022. Many of those who purchased properties in the competitive 2021 market had to make significant compromises, which led to an increase of renovation projects. Nearly three-quarters of homeowners questioned by Zillow said they would consider at least one renovation project in the upcoming year, with the most common projects being bathroom and kitchen renovations.

It’s important to address that work culture in 2022 is going to play an important role in the movements of the market. People’s situation at work will be the main factor deciding their next steps in terms of moving and housing in general. If the remote work trend continues, which it most likely will, we’ll see a lot of demand for rental spaces in downtown and urban areas, as the amenities and lifestyle there attract many remote workers. However, as the pandemic starts to wind down, people might shift back to more traditional work arrangements, which will certainly reflect on the housing market.

With that said, there is no doubt that 2022 is going to be an exciting and turbulent year from the real estate perspective. Retirement markets are likely going to grow, along with the demand for affordable housing in second-tier cities. Home prices are going to remain high as long as the demand exceeds the market supply. Despite home builders’ efforts to get the housing supply up, the shortages are not expected to die down any time soon.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes