Outlook on 2022 for Home Buyers
It has been a crazy roller coaster of a year, especially when it comes to the housing market.
We went from low housing prices at the start of the pandemic in 2020 to a tremendous rise in housing prices and bargain level mortgage rates throughout 2021.
Now, everyone is wondering what they should expect in 2022.
Is there going to be a crash?
Will prices start to go down?
Should we expect the prices to continue to rise?
These are questions many real estate and property management companies are trying to answer.
But, there are several factors that are making people question their original forecasts.
What Could Affect The Outcome of 2022?
When it comes to forecasting the housing market of 2022, many companies are left second guessing their original predictions. There is a range of ideas for what the housing price will increase by. For instance, Zillow believes that prices could increase by 13.6% while Realtor.com predicts prices will only increase by 2.9%.
So, what is the cause of the housing industry not being able to find an exact number… or even a relatively close percentage of increase?
I’m sure everyone is familiar with the labor shortage mainly caused by the “Great Resignation”. The shortage combined with lack of supply has caused uncertainty in what to expect.
With the lack of workers and supplies like lumber to fit the growing demand of housing, it is uncertain how that will affect 2022. Although many are hoping that the labor shortage will begin to dissipate around the beginning of next year and supply will begin to increase, no one is 100% sure of what will happen.
Another main factor that is affecting predictions is the availability for individuals to work from home. Due to this relatively new option for people to stay at home, more and more are looking to move to places outside of the city where they can find homes with more square footage and yard space at a lower price than in the larger cities.
The demand for housing in the suburbs leaves more room for doubt in what will happen to housing prices in various areas.
Will housing prices in the cities decrease while prices in the suburbs increase?
Millennials play a huge role in the answer to that question as they are beginning to get into the prime age range for home buying (26-35).
What Are The Current Predictions For The Coming Year?
Although there is a disagreement on exactly what to expect, there are numerous agreements as to what will be happening in 2022 on a more general level.
For instance, most companies agree that the housing market will not crash. In fact, it will remain at a high price, but the increasing rate will start to lower. Instead of seeing huge spikes in housing prices like we did in 2021, they will continue to rise gradually throughout the year at a much smaller rate.
The reasoning behind this prediction is that there is till a huge demand for housing that is mainly coming from the Millennial generation. Lack of supply also plays a major role in not having enough inventory to meet demand which would cause the prices to remain relatively consistent with what we are currently seeing.
In addition to the rise in prices, there is also an agreement on the prediction for mortgage rates. As we enter into the new year, we can expect rates to begin increasing due to high inflation. However, there isn’t a concrete idea as to what that number will be.
How Will 2022 Affect Buyers?
The prime location that most home buyers are looking at investing or purchasing in are suburbs. They provide more yard space, square footage, and a quieter place to live away from the busyness of the city.
Due to people being able to stay at home, more people (mainly Millennials) are looking to find homes in these areas, which could make it challenging for interested buyers to find a home in the suburbs. This is especially true for those who are first time home buyers that might not know exactly what to look for.
Which raises the main question for buyers… is 2022 going to be a good time to buy property?
Yes and no.
If you are financially stable and secure, then buying a home might not be a bad option for you. However, with the prediction of rising mortgage rates and the possibility of housing prices remaining high, if someone doesn’t have the financial earnings to cover the cost, insurance, and other fees involved, then they might want to wait for when their income can pay for the price of buying a new home.
Remember, when you are budgeting for a house, it is important that the cost of your monthly housing is only 30% of your monthly income.
Although this coming year brings some uncertainty to the housing market. It isn’t too different from other years when it comes to the research that goes behind purchasing a property. It is still important for buyers to know and understand various details of the market and what they want to purchase such as looking at fees, rates, location, and comparing that to their lifestyle and budgeting how much they can afford.
What To Expect From T&H
Relating back to the labor shortage that we have seen take place towards the end of 2021. Everyone at T&H is working diligently to help minimize the complications and delays that are being caused due to a lack of contractors in Indiana.
We currently have all hands on deck when it comes to finding contractors and vendors, so our company is able to have little to no delays. Not only are we trying to find more people to work on projects, but we are also implementing new systems on the backend of our business to make everything run as smoothly as possible.
As a property management company, we meet with several people every day and handle hundreds of properties, so it is important to us that we stay on top of the market trends and statistics and provide as much information as possible for what we can all expect in the coming months and year.
Because of this, we will be creating even more content this year in terms of our blogs in hopes of being a beneficial resource to investors, new home buyers, and our current Clients.
Hopefully, the labor shortage will begin to resolve, supplies will increase, and the housing market will begin to settle down. 2021 was a crazy year, and I think we are all ready for everything to get back to a somewhat normal pace as we enter into the new year.
We are looking forward to the opportunities that 2022 will bring to our new and current Clients.