Realtor.com report: 2022 real estate market may be "mixed bag"
A new report from realtor.com indicates 2022 should see an increase in existing homes sales, though challenges with supply will likely linger and turn the year into something of a “mixed bag.”
The report, out Wednesday, notes that 2022 is likely to be “very competitive” for homebuyers. Though realtor.com expects inventory to recover somewhat from recent declines, the report also notes that demand from millennials and first-time homebuyers will likely outmatch “the inventory recovery.” The report ultimately forecasts a 6.6 percent year-over-year jump in existing home sales in 2022.
Additionally, the report pegs median U.S. sales price appreciation for existing homes at 2.9 percent year-over-year. Mortgage rates are also expected to rise, reaching an average of 3.3 percent for the whole year but hitting 3.6 percent by the end of 2022.
Rents should grow as well, the report adds, rising 7.1 percent compared to one year prior.
The takeaway from these numbers is that would-be homebuyers will have more opportunities to find houses, but “affordability will be a growing consideration,” the report notes.
“With listing prices, rents and mortgage rates all expected to climb while incomes rise, 2022 will present a mixed bag of housing affordability challenges and opportunities,” the report adds.
Realtor.com Chief Economist Danielle Hale ultimately predicted 2022 will be a “whirlwind year of homebuying.”
“Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise,” Hale said in the report. “And with more than 45 million millennials within the prime first-time buying ages of 26-35 heading into 2022, we expect the market to remain competitive.”
The report suggests that, thanks to the ongoing pandemic, homebuyers will still be interested in more space, and that suburbs will remain appealing. Diversity will also be a theme of 2022 and “populations like Hispanic Americans will play a growing role in the 2022 housing market.”
The report ultimately predicts that the Portland, Maine, metro area will see the greatest price growth next year, with home values soaring 10 percent year-over-year. Other areas with strong expected growth include the Providence, Rhode Island, metro area, where prices will jump 9.5 percent year-over-year, and Salt Lake City, Utah, where they will rise 8.5 percent.
Realtor.com also expects Salt Lake City to have a 15.2 percent year-over-year jump in existing home sales, the largest of any major metro area in the country. The Indianapolis area should see the second highest jump, at 14.8 percent.
George Ratiu, realtor.com’s manager of economic research, said in Wednesday’s report that 2022 should ultimately have “dynamic” activity, though it will also have some ?“growing pains as we navigate the path forward from the height of the pandemic toward a new normal.”