The past 12 months have been quite a roller coaster for the housing market in our area, and you might be wondering what’s in store for the upcoming year. Record home prices, low inventory, and buyer competition were the themes that dominated our market. This caused many would-be home buyers (and sellers) to hold off on a new home until things calmed down. Experts say that market conditions should even out in the coming months, giving those that lost out a better chance.
Aggressive home price appreciation was seen throughout 2021. This caused concern for some people, who feared we were on the verge of another “housing bubble”, and subsequent crash. This wasn’t the case though, and the unusual 2021 market was largely driven by low inventory – a simple case of supply and demand. Experts are predicting inventory levels will improve in the coming year, which will stabilize home price appreciation. Home values are not expected to depreciate in 2022, but will appreciate at a much more modest rate.
Probably the biggest driver of our unusual market conditions, was the lack of housing inventory. As sellers held off on listing their homes due to the COVID pandemic and financial uncertainty, inventory began to dwindle. With buyers looking to take advantage of historically low interest rates, demand quickly began to outpace supply. Home prices soared, and many buyers lost out amidst the bidding wars that became commonplace. Experts project that inventory will increase in 2022 as more sellers gain confidence and new construction picks up again.
Mortgage rates hit all-time historic lows over the past year, and many buyers jumped to take advantage. Experts are predicting that interest rates will rise, but not a large amount. Still, any increase will mean an increase in the mortgage payment for a given home too. Waiting till next year’s busier spring or summer market might mean paying more for the same house you could buy now.
The bottom line is that market conditions will improve in the months to come. If you’ve been waiting to buy or sell, unsure of where our market is headed, now is a great time to get a strategy in place to get you into a new home in 2022.