Last year was one for the real estate history books. The pandemic helped usher in a buying frenzy that caused home prices to soar nationwide by a record 19.9% between August 2020 and August 2021.1

However, there were signs in the fourth quarter that the red-hot housing market was beginning to simmer down. In the month of October, only 60.3% of sales involved a bidding war—down from a high of 74.5% in April.2 While this trend could be attributed to seasonality, it could also be a signal that the real estate run-up may have passed its peak.

So what’s ahead for the U.S. housing market in 2022? Here’s where industry experts predict the market is headed in the coming year.

 

 

MORTGAGE RATES WILL CREEP UP

 

Most economists expect to see mortgage rates gradually rise this year after hitting record lows in late 2020 and early 2021.3 

 

Freddie Mac forecasts the 30-year fixed-rate mortgage will average 3.5% in 2022, up from around 3% in 2021.4

 

The Mortgage Bankers Association predicts that rates will tick up to 4% by the end of the year. "Mortgage lenders and borrowers should expect rising mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher," said Mike Fratantoni, chief economist for the Mortgage Bankers Association at their 2001 Annual Convention & Expo in October.5

 

However, it’s important to keep in mind that even a 4% mortgage rate is low when compared to historical standards. According to industry trade blog The Mortgage Reports, “Between 1971 and December 2020, 30-year mortgage rates averaged 7.89%.”6

 

What does it mean for you? Low mortgage rates can reduce your monthly payment and make homeownership more affordable. Fortunately, there’s still time to lock in a historically-low rate. Whether you’re hoping to purchase a new home or refinance an existing mortgage, act soon before rates go up any further. We’d be happy to connect you with a trusted lending professional in our network.

 

 

THE MARKET WILL BECOME MORE BALANCED

 

In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus and a shift to remote work triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labor shortages hindered new construction. 

 

This led to an extreme market imbalance that benefitted sellers and frustrated buyers. According to George Ratiu, director of economic research at Realtor.com, “Prices and sellers reached for the moon [last] year. It looks like we are now about to move back to earth.”7

 

Data from Realtor.com released in November showed that listing price reductions had more than doubled since February 2021. And the average days on market (an indicator of how long it takes a home to sell) has been slowly creeping up since June.7

 

What’s causing this change in market dynamics? The real estate market typically slows down in the fall and winter. But economists also suspect a fundamental shift in supply and demand.

 

At the National Association of Realtors’ annual conference last November, the group’s chief economist, Lawrence Yun, told attendees that he expects increased supply to come from an uptick in new construction—which is already underway—and an end to the mortgage forbearance program. “With more housing inventory to hit the market, the intense multiple offers will start to ease,” he said.8

 

Demand is also predicted to wane slightly in the coming year. Rising mortgage rates and record-high prices have made homeownership unaffordable for a growing number of Americans. And in a recent Reuters poll, nearly 80% of property analysts said they expect housing affordability to worsen over the next several years.9

 

What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Increased supply and softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with more inventory on the market, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals.

 

 

HOME PRICES LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE

 

Nationally, home prices rose an estimated 16.8% in 2021.8 But the average rate of appreciation is expected to slow down in 2022.

 

Danielle Hale, chief economist at Realtor.com, told Yahoo! News, “Home asking prices have decelerated in the second half of 2021, with median listing price growth slipping from a peak of 17.2% in April to just 8.6% in October.”10

 

But experts disagree about how much more property values can continue to climb this year. Goldman Sachs predicts that home prices will rise by 13.5%, while Fannie Mae and Freddie Mac are forecasting a 7.9% and 7% rate of appreciation, respectively.2

 

However, not all analysts are as bullish. The National Association of Realtors predicts a 2.8% rate of appreciation for existing homes and 4.4% for new homes, while the Mortgage Bankers Association expects the average home price to decrease by 2.5% by the end of the year.10,2

 

According to Hale, “With prices near all-time highs and mortgage rates expected to rise, we expect this slowdown in prices to continue.”10

 

What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. We can help you get the most for your money in today’s market.

 

 

RENTS WILL CONTINUE TO RISE

 

Along with home, gasoline, and used vehicle prices, rent prices rose dramatically last year. According to CoreLogic, in September, rents for single-family homes were up 10.2% nationally year over year.11 And economists at Realtor.com expect them to climb another 7.1% in 2022.12

 

“Homes are expensive now...but for most people, the comparison that is most important is how that cost of homeownership is going to compare to the cost of renting,” Zillow Senior Economist Jeff Tucker told CNBC in November.13

 

Tucker also pointed out that rent is less predictable than a mortgage—and more likely to go up along with inflation.13

 

Real assets, like real estate, are often used as a hedge against inflation. That’s because property values typically rise with inflation.14 And when a homeowner takes out a mortgage, they lock in a set housing payment for the next 30 years. 

 

In contrast, renters are at the mercy of the market—and they don’t gain any of the benefits of homeownership, like tax deductions, equity, or appreciation.

 

George Ratiu of Realtor.com told CNBC that he advises buyers to consider their budget and time frame. If they plan to stay in the home for at least three to five years, he believes it often makes sense to buy.13

 

Fortunately, it’s shaping up to be a better year for buyers. “I think 2022 has the promise of providing less competition, a lot more homes to choose from, and, as a result, a lot more approachable prices,” Ratiu said.13

 

What does it mean for you? Both property and rent prices are expected to continue rising. But when you purchase a home with a fixed-rate mortgage, you can rest assured knowing that your monthly mortgage payment will never go up. Whether you’re a first-time homebuyer or a real estate investor, we can help you make the most of today’s real estate market. 

 

 

WE’RE HERE TO GUIDE YOU

 

While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood. 

 

If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.

 

 

 

Sources:

1. Fortune -
   https://fortune.com/2021/11/04/us-home-prices-real-estate-forecast-2022-outlook/

2. Fortune -
   https://fortune.com/2021/11/29/housing-market-real-estate-predictions-2022-forecast/

3. Freddie Mac -
   http://www.freddiemac.com/pmms/pmms30.html

4. Freddie Mac -
   https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-strong-housing-market-will-continue-even-rates-and

5. Mortgage Bankers Association -
   https://www.mba.org/2021-press-releases/october/mba-annual-forecast-purchase-originations-to-increase-9-percent-to-record-173-trillion-in-2022

6. The Mortgage Reports -
   https://themortgagereports.com/61853/30-year-mortgage-rates-chart

7. Realtor.com -
   https://www.realtor.com/news/trends/has-housing-market-peaked/

8. National Association of Realtors -
   https://www.nar.realtor/newsroom/nars-yun-says-housing-market-doing-well-may-normalize-in-2022

9. Reuters -
   https://www.reuters.com/world/us/rise-us-house-prices-halve-next-year-affordability-worsen-2021-12-07/

10. Yahoo! News -
    https://www.yahoo.com/now/where-home-prices-headed-2022-130012748.html

11. CNBC -
    https://www.cnbc.com/2021/11/16/inflation-rent-for-single-family-homes-surged-10percent-in-september.html

12. Realtor.com -
    https://www.realtor.com/news/trends/what-to-expect-in-2022-housing-market/

13. CNBC -
    https://www.cnbc.com/2021/11/23/rising-inflation-hot-housing-market-what-you-need-to-know-about-buying-a-home.html

14. Money -
    https://money.com/inflation-2021-stocks-bitcoin-gold-reits-commodities/

Every year, it seems the holidays sneak up on us—and every year, that brings with it the dreaded last-minute gift panic. Finding a present that hits all the right notes can be surprisingly stressful, even when it comes to people you’ve known for years.

But have no fear! We’ve lined up a list of unique gifts for every “type” on your list. And since we work in real estate, they’re all centered around home life. From the coffee snob to the sports enthusiast, these presents are the perfect way to bring beauty, function or a touch of whimsy to your loved one’s home this holiday season.

 

FOR THOSE WHO ARE ALWAYS IN THE KITCHEN

We all know someone whose kitchen is their happy place—but once all the basics are covered, it can be hard to find the perfect present. These gifts will be a treat for the chef, baker, or food lover on your list, no matter how well equipped they are.

1. The Coffee Snob

Glass Pour-Over Coffeemaker - $36

Have a java lover on your list who just can’t get their brew right at home? This high-end pour-over system makes a smooth brew that can even be refrigerated and reheated so your recipient can enjoy a perfect cup at any time.

2. The Foodie

Shiitake Mushroom Log Kit - $30

Help your favorite gourmand create restaurant-quality meals with this kit that allows them to grow delicious mushrooms right in their cupboard. All they’ll need to do is soak the wood and put it in a cool place, then wait a few weeks, and voila—mushrooms! Best of all, they can keep growing mushrooms on the same log for years.

3. The Baker

Vintage Etched Cake Stand - $60

If you’re lucky enough to have a fabulous home baker on your list, give a gift that reflects the joy their treats bring to others. This lovely glass cake stand is the platform that a beautifully decorated dessert deserves.

4. The Tea Aficionado

Flowering Tea Set - $25

Your favorite tea lover may have tried all of the herbal blends out there, but we bet they haven’t seen tea like this. This set contains two “blossoms” of tea leaves hand-sewn around flowers that bloom when you place them in the included glass teapot and add hot water.

 

FOR THOSE WHO WOULD RATHER BE IN THE BACKYARD

For many of us, time outdoors is the ultimate source of rejuvenation. The nature-lover on your list is sure to appreciate these presents that help them maximize that joy in their daily lives.

5. The Gardener

Striped Garden Tote Bag - $37

Dedicated gardeners all need a great bag to carry their gear. This tote is attractive and sturdy and will help them keep their home’s exterior beautiful and welcoming.

6. The Flower Lover

Monthly Flower Subscription - starting at $40/month

If your loved one prefers to enjoy their flora without all the work, a delivery of farm-fresh flowers is sure to surprise and delight. And you can keep the joy blossoming year-round with a monthly or bi-monthly subscription.

7. The Environmentalist

Collapsible Metal Straw - $20

Know someone who is trying to bring less plastic into their home? This reusable metal straw means they’ll never have to buy a box of plastic straws again. And since it collapses into a tiny carrying case, they can use it at home or on the go.

8. The Outdoor Adventurer

Solar Phone Charger - $29

Have a camper or adventurer on your list? This solar-powered phone charger, which comes with a built-in flashlight and compass, is a must-have. It will also make a great addition to their home emergency kit.

 

FOR THOSE WITH THEIR NOSE TO GRINDSTONE

Like it or not, most of us spend a good chunk of our lives working—whether at a job or on projects and chores around the house. These gifts are designed to make that work a bit easier and more enjoyable.

9. The Remote Worker

Home Office Lap Desk - $35

Working at home can be great—in part because you can work from anywhere in the house. The remote worker on your list will appreciate this lap desk with a built-in mouse pad and phone slot, which will allow them to work comfortably from the couch or the bed without overheating their computer.

10. The Back-to-The-Office Worker

Bento Lunch Box - $27

If your loved one is heading back to the office, it doesn’t mean they have to give up the healthy habit of a home-cooked meal. Send them to work with this stylish lunch box packed full of nutritious food.

11. The Do-It-Yourselfer

65ft Laser Distance Measure - $50

The handy person on your list can say goodbye to unwieldy tape measures with this nifty device. It’s perfect for DIY projects up to 65 feet.

12. The Clean Freak

Portable Sanitizing Travel Wand - $60

In the COVID-19 era, we’ve all become a little germaphobic. This UV wand kills viruses and bacteria in seconds without any wiping or washing required. It’s perfect for disinfecting shoes, computer keyboards, and more!

 

FOR THOSE MOST PASSIONATE ABOUT THEIR HOBBIES

Of course, there’s a lot more to life than work. If you’re gifting a friend or family member who really lights up when they talk about their hobbies, we’ve got you covered.

13. The Sports Enthusiast

Hockey Stick BBQ Set - $45

Looking for a gift for the sports enthusiast in your life that isn’t another jersey? These BBQ tools made from repurposed hockey sticks are a great pick. Perfect for cooking up food to watch with the game!

14. The Bookworm

The Book Lover’s Journal - $13

Know someone who loves to curl up on the couch with a good book? This journal will help the book-lover on your list keep track of what they’ve read, as well as their ever-growing “to-read” list.

15. The Runner

Marathon Map Hydration Bottles - $36

Help the runner you love to stay hydrated (and motivated) with a water bottle inscribed with their favorite race route. It’s perfect for runs around the neighborhood or just toting around the house.

16. The Tourist

Travel Backpack - $100

Make it easy for the travel lover on your list to bring back souvenirs. This lightweight backpack folds flat so it’s easy to pack but sturdy enough to carry their new treasures all the way home.

 

FOR THOSE WHO PUT FAMILY FIRST

For many of us, the greatest joy in life comes from our relationship with our family. Help your recipient strengthen and celebrate those all-important connections with these thoughtful gifts.

17. The New Parent

4-in-1 Baby Food Maker - $155

It’s hard to know what to buy for new parents once their registry is cleared out, but if they’re interested in making baby food at home, this tool is a must-have. It makes the process, from steaming to mixing, fast and easy.

18. The Genealogy Fan

DNA Kit - $99

Know someone interested in reconnecting with their ancestral home? This DNA kit can help them trace their geographical heritage and uncover their family history.

19. The Pet Person

Custom Printed Socks - $25

Is your friend’s pet their favorite family member? These adorable socks are sure to put a smile on their face as they cozy up on the couch with their fur baby. And since you can feature up to four pets on each pair of socks, no one needs to feel left out.

20. The Documentarian

Mini Link Printer - $100

We all have that relative who snaps a million photos at every family event. Help them capture each precious moment with this unique gadget that essentially transforms a smartphone into a Polaroid camera. It makes it easy to customize and print out snapshots to display around the house or insert into a scrapbook for posterity.

 

READY TO GIVE YOURSELF THE ULTIMATE GIFT?

We want to be your real estate consultants through every season of life. So please don’t hesitate to reach out with questions or to ask for recommendations or referrals any time of year. And when you’re ready to give yourself the gift of a new home, contact us to talk about your options. From finding the right neighborhood to identifying the amenities that will make the biggest difference to your quality of life, we’re always eager to help.